Weekly Insights - Edition 119
This week: global equity sectors, financial conditions tightening, cyclicals vs defensives, value vs growth, and contrarian signals for "defensive value"...
Welcome to the Weekly Insights report! The weekly insights report presents some of the key findings from our institutional research service, providing an entrée experience (in terms of price and size).
Global Markets Monitor - notable developments
Most global equity benchmarks lower, notably US tech stocks leading the correction (and cyclicals losing vs defensives, growth losing vs value) -- most illustrative is the relative performance of commodity sectors (up as commodities rebound), financials (benefiting from higher bond yields), while tech on the other hand is losing ground, while defensives are mixed for now
Treasury yields pushing up against the top end of the range, real yields notably at risk of breaking higher (would rattle growth stocks even further), energy/commodity resurgence also stoking fears of inflation staying higher for longer (and hence rates too). Credit spreads/CDS pricing rebounding slightly off the lows.
DXY pushing higher, Asian/EMFX softer, USDJPY attempting to break out. NZDUSD and AUDUSD weaker - at risk of breaking lower. Stronger dollar along with rebounding energy prices makes (and higher yields) makes for a situation of tightening financial conditions. Within commodities energy/crude oil is the main strong spot, while the rest of commodities have been mixed e.g. agri weaker, metals testing support, precious metals also weaker.
Market themes: Growth stumbles, value finds its feet...