Technology & small-caps vulnerable to further rise in yields
Tangible sectors of market showing strength & leadership
One of the biggest stories of the first quarter has been the dramatic rise in bond yields. The Federal Reserve has repeatedly stressed its willingness (even desire) to let the economy run hot. In doing so it has kept the short-end of the yield curve well-anchored. The long-end of the curve, which is impacted by the hopes and fears of bond traders more than pronouncements by the Fed, has seen yields move higher. The yield on the benchmark 10-year T-Note came into the first quarter below 1.0% and has risen above 1.7% as the quarter winds down. The 10-year T-Note yield is finishing the quarter at its highest level since January 2020. As important as the absolute level of bond yields is the turn higher in the longer-term trend and the pace at which that trend is rising.
