The 10-year Treasury bond yield broke above resistance at 1.40%, which could benefit value stocks relative to growth stocks in Q4. Our indicators suggest the risk-on rally is stabilizing after the volatility spike last week.
We are positioned for a rotation into lagging sectors such as industrials/transports, consumer discretionary, financials, and energy. Healthcare continues to show relative strength, especially within the biotech space. Globally, we’re also seeing stabilization in Chinese equities, which recently became positively correlated with Treasury yields.
10-year Treasury yield breakout