Leaders-Laggards

Last week was huge for the tech sector, although the gains might be based on speculation more than anything. The utilities/S&P 500 signal looks like it could turn risk-off at any time and with Treasury prices slowly moving higher again, there’s some momentum for a bit of a defensive shift here. Lumber prices snapped back almost as quickly as they fell in recent weeks, while gold prices continue to remain relatively flat.

Developed markets have been slightly outperforming the S&P 500 over the past two months, but it’s been a slow and shallow climb. Sentiment remains miserable for consumer staples, which has seen zero momentum and keeps plunging to new lows. Small-caps continue to demonstrate uncommon strength.

Financials are finally getting a notable boost from the yield curve. Last week’s 5% gains for small-caps marked a return to the huge weekly gains the sector has become accustomed to over the past couple of months. With the exception of junk bonds, which are following the rally in risk assets, fixed income continues to lag. There has been some demand for dollar liquidity from defensive-minded investors.