Alec Young, managing director, global markets research, FTSE Russell:
“The 10-year Treasury yield has risen from 2.4% to 2.56% year-to-date. This relatively sharp uptick in rates over such a short period of time has fueled significant sector performance dispersion in US stocks. It’s worth noting that this represents a departure from 2017, when sectors moved more in lockstep to the upside. Rates have risen as global economic optimism has increased amid better economic news and hopes for a positive impact from tax reform. In 2018, economically sensitive, cyclical sectors including Technology, Energy and Materials, are up sharply as the market is anticipating faster growth. Conversely, counter-cyclical bond proxies like Utilities and REITs have fallen sharply in the face of higher rates.”
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