The Power of the Pattern suggested interest rates were about to blast off in May of last year (See post here)
Since that post the yield on the 10-year note is up 80%! Below is the performance of interest sensitive assets & the S&P 500 since that post.
The above chart reflects its been a rough 8 months for assets that are impacted by interest rates. Below is an update on the patterns of yields, Real Estate & Utilities.
CLICK ON CHART TO ENLARGE
This key support test is coming into play with unique sentiment readings. In May when the Power of the Pattern suggested that rates would head higher, Bond bulls were easy to find….not so much now.
Whether we want to blame the rise on the “taper,” excess issuance of bonds by the Fed or extremes in sentiment, what happens from here for bonds and the interest sensitive arena has reached a critical inflection point.
Our “Global Dashboard” & Premium services helps investors with what we call “slow money assets.” How is slow money defined? Assets that they can’t trade often (401k assets as an example) or assets investors don’t want to move frequently.
Out flows have been large from bonds over the past few montths, yet Trillions remain invested in interest sensitive assets (Bonds, Utilities & Real Estate). Dashboard/Premium members have received a bullish message for yields/bearish for bonds for months now, steering these slow money assets out of bond funds.
From a technical standpoint, what happens to yields, Utilities & Real Estate in the 3-pack above will have a huge impact on them going forward.