Market review 24.02.18
Hello everyone,
The broad equity market remains risk-on, and a healthy rotation is occurring. It’s not all about US tech!
With monthly inflation data released this week, it’s an excellent time to assess where growth stocks, bonds, commodities, and emerging markets stand.
I’ll cover all this in today’s post.
Growth stocks vs. Bond Yields
Interestingly, while key commodities have erased the massive moves off the Covid lows, rising bond yields remain a talking point among market participants.
Bond yields and the US dollar have been trending higher all year. The US 30-year yield has surpassed the 2022 highs. However, the US 5-year and 10-year Treasury yields have yet to reclaim this major multi-year level:
In recent years, growth stocks have been very sensitive to yields. So, it’s interesting that for the second week in a row, many small-cap growth ETFs gained while yields climbed! This includes:
XBI (SPDR Biotech ETF)
ARKK / ARKW / ARKF (thanks to their large weight in COIN, up 27% this week)
XRT (SPDR Retail ETF), which has also made a major breakout.
Other growth segments fell this week but are still above key support levels. This includes the diversified WCLD ETF (shown below) and various semiconductors (link). We need to see upside follow-through ASAP.
