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John
Murphy's Market Watch |
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RISING RATES
HURTS BANKS AND HOMEBUILDERS |
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10-YEAR YIELDS SOAR OVER 4%...
While today's surprisingly strong jobs report was good for stocks,
it was very bad for bonds. Bond prices fell more than two full
points. The 10-year T-note, which rises when prices fall, surged all
the way to 4.14%. That certainly seems to confirm the idea that
long-term rates are finally starting to move higher. There's good
and bad news in that. It's good for economically-sensitive stocks
that do well in a stronger economy. It's bad for rate-sensitive
stocks that are hurt by rising rates. In time, rising rates can be a
bad thing. Over the short-run, however, rising rates are viewed as
confirmation that the economy is getting stronger and the job
picture is finally improving. This week's sector rotations showed a
more optimistic market. The top sectors were technology, materials,
and industrials. The weakest were financials, energy, utilities, and
consumer staples. That rotation is reversing the more cautious mood
of the market during the first quarter when consumer staples and
energy were the leaders and technology was the laggard.
- John Murphy
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Charts from Equis
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