Don't Ignore This Chart!

Surging Treasury Yields Paving The Way For Financials

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Over the past two trading sessions, treasuries are being sold hand over fist with corresponding yields soaring.  Financials have exploded higher on this development.  This is simply a continuation of what we've seen since the Brexit-related lows in June.  Those higher yields will add profits to the bottom lines of many financial companies, especially banks ($DJUSBK) and life insurance companies ($DJUSIL).  The relative strength in financials has been advancing along with the 10 year treasury yield ($TNX) since late June as you can see from the chart below:

Until Brexit, financial stocks were badly lagging the benchmark S&P 500, but that's changed in a big way since.  Throw in the Trump victory yesterday and rising yields and a strong financial sector seem to now be with us for awhile.  The group has become overbought, however, so it might be best to see some profit taking in the space before adding new positions or adding to existing positions.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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