Updates coming from the previous "Banks Look Cheap vs Utilities" chart. For those who don't remember here are the flows we have been tracking:
Now it is clear US 10-year Yields are starting to withdraw again, although this time Banks vs Utilities are less affected. I have been talking with clients recently around this space and there is broadly no concern....
A very interesting chart today looking at a Generic US 10Y Yield curve in comparison with Banks vs Utilities ... despite the rising correlation Utilities continue to look expensive and risks are elevated relative to banks.
This chart is showing the correlation or asset classes to US10Y moves. The pattern is consistent across the board for Banks which look...
XLU is a massive, highly liquid fund that only invests in utility companies that are included in the S&P 500. It is one among the cheapest and most liquid options. I am expecting a structural break down. Will only enter if the relative upward strength or the volume of the pair runs out. I have identified the same structure on RSI below. Have a look.
