Key Takeaway: Bond yields ready to move higher. Trends are still rising and inflation is proving persistent rather than transitory. Financials have been resilient but look for Growth to struggle if bond yields rise.
Financials have quietly maintained a spot in the sector leadership group based on our relative strength rankings. They have been in the leadership group since November and have been the top-performing sector over the past year.
The discrepancy in between the cap-weighted and equal-weighted rankings for the Discretionary and Communication Services sector puts on display the impact a handful of mega-caps can have on sectors (and indexes). Without the impact of FB and GOOGL, Communication Services would be one from the bottom rather than one from the top. The inverse is true with respect to Consumer Discretionary and AMZN.
