Leaders-Laggards

Even though the growth-over-value trade is starting to pick up, the tech sector as a whole hasn’t really participated. If the BoJ decides to pull the trigger on a rate hike this week, the greenback could be heading sharply lower as it did back in August. The continued rally in gold tells me that we could see utilities make a comeback.

Small-caps continue trading on their value characteristics, not their growth ones. Treasuries are rallying here to the point where it can’t just be considered a quick pop. As mentioned many times in this space, the key here is the yen. If the BoJ decides to hike interest rates next week, I wouldn’t be surprised to see the dollar index make a sharp move lower.

Utilities stocks have been turning more volatile in recent weeks, lagging since election day, but since rebounding in the nascent defensive shift. After an initial post-election bounce, small-caps are starting to get a head of steam again. This is the behavior we’d expect in an environment where business conditions are likely to get more favorable. Long bonds finally had a big week, but is it sustainable?