Risk assets seem to be back in favor at the moment, but don’t lose sight of the big picture. Inflation protection seems to be in wait-and-see mode, which is probably the right position for now. Could we finally be seeing the European bank rally finally starting to fizzle? Utilities finally gave way to the building momentum in both tech and growth stocks.

Staples, and more broadly low volatility stocks, have both been outperforming their riskier counterparts since February. Tech remains one of the bigger false positives in the market right now. there’s a lot more money moving into international equities here (both on an absolute and relative basis) than U.S. equities. Gold is also rallying hard, which may be a function of investors starting to hedge their bets ahead of the debt ceiling deadline.

Tech is still a “safe place” for some investors, but the volatility is concerning. It is a bit interesting to see junk bonds lagging Treasuries here, an asset class that really hasn’t done much lately in its own right. Utilities are usually a good proxy for short-term sentiment, but it hasn’t really given us a good signal throughout 2023. Last week’s jobs report dropped the hammer on Treasuries once again.