Bond Sell-Off Has Seen Industrials Gain, Utilities Lose

Hickey and Walters (Bespoke) submit: After periods of heightened volatility like we have experienced over the last several days, we like to take a step back and see what, if anything, has changed in the market. One way which we have found useful over the years is to gauge the relative strength of each of the ten S&P 500 sectors.

The ten graphs below highlight the relative strength of each S&P 500 sector. Rising lines indicate the sector is outperforming, while falling lines indicate periods of underperformance. Charts highlighted in red indicate that the sector has underperformed the market over the last year. Finally, the red dots in each chart indicate the day in which bonds peaked in May.

As the charts illustrate, for the most part, there has been little shift in the trends of sector relative strength now versus before the bond sell-off began. The only two sectors which have seen a major shift in trend are Industrials (improving) and Utilities (deteriorating).

click to enlarge

Comments

[Mark Hines:]

I'm totally with you on the Utilities deterioration. Seems to make sense since people often invest in Utilities companies for the high dividend yields, and those dividend yields become entirely less attractive as bond rates rise. Considering 10 year treasuries rates are up, it just seems to make sense that utilities are down.
Mark Hines.

2007 Jun 19 01:54 PM