U.S. Financials Aren't Rising With Yields, in an Ominous Omen
- Typical link between financial stocks and rates isn’t holding
- Lagging sector has preceded weak stock market in the past
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In an ominous sign for U.S. equity bulls, financial shares are failing to capitalize on the steepening Treasury yield curve, and are even lagging behind the equally interest-rate sensitive utilities sector.
During the most recent move in Treasuries -- a 40 basis-point advance for 10-year yields from Aug. 24 through Tuesday, and a 13 basis-point widening in the spread over two-year rates -- financial stocks have fallen 0.4 percent. By contrast, utilities have gained 1.6 percent. The S&P 500 Index is up about 0.2 percent over the period.