Please enable javascript in your browser to view this site!

Treasury yields breaking out, along with Financial sector as rate hike looms

Minor bump in US Futures in the last hour as S&P has risen to test yesterday's highs at 2140 while most of the world is trading lower.  The volatility this am continues to revolve around Bonds extending their recent selloff and most wondering at what point do equities respond?  given that for some time both bonds and stocks rallied in unison this year and now we're seeing yields move up sharply.  The answer to that doesn't seem to be as certain as to how quickly or how large a move might affect stocks, but we've seen persistent inflows into fixed income and outflows of equities this year-  

The key development in the last 24 hours concerns Treasury yields breaking out further - TNX above 1.80 along with Financial sector breaking out (XLF) while in relative terms this happened last week and also with Equal-weighted Financials (RGF) This is largely revolving around the larger Banks now playing catchup and following suit- Whether or not Both Financials and Tech can stave off a larger selloff given their strength while most of the equity market remains under pressure is tough to say.  we have seen some evidence of stocks lifting with regards to % of stocks trading above their 10day which is back up to 50% but % above 50-day ma remains stubbornly low at 35% as of yesterday, so just about 1/3 of all stocks are trading above their 50-day and breadth and momentum are still a but subdued while structurally stocks are range-bound.  Getting up above 2155 for S&P Futures would be a real positive short-term that cant be ignored while under 2123 is bearish- for SPX cash.. 2165 resistance and 2130 on the downside.  We're seeing decent pre-mkt strength this am out of OCN, WDC,VMW, TSLA, TWTR, YNDX, BMY, while some big declines out of AKS, GRPN, INFN, ALV, GNC, WLL-     Technically longs in TBT should work fine for the days ahead and Financials should be overweighted.. as I expect this lift in yields to continue while the yield curve steepens further-  Let me know if you have any questions