Leaders-Laggards

Passage of the new stimulus bill in the Senate over the weekend secures the notion that the global recovery will continue to progress, while steadily rising oil prices act as an additional catalyst. As long as we keep hearing chatter about the future of inflation, we’ll likely see forces continue to want to push interest rates higher. Tech and growth stocks continue their correction as investors rotate into cyclicals with confidence that the recovery is coming.

Despite a notable risk-off swing last week, consumer staples continue to struggle getting any love from investors. Developed market foreign equities extend their recent underperformance streak that has been in place for most of 2021. Treasuries remain under steep pressure as the 10-year yield is nearly 100 basis points higher today than it was at its August low.

Small-caps are starting to get a little more volatile here as this 6-month uptrend relative to large-caps could be running into fatigue. Last week marked the first significant road bump in the TIPS bull market in nearly a year. The fall in Treasury prices over the past month has made junk bonds look comparatively more attractive, although absolute returns from this group are still relatively flat.