Starting To Shape Up Like An ABC Correction

Aug 13 13:08 2019 Print This Article

Market Recap for Monday, August 12, 2019

The flight to safety was clear on Monday. The 10 year treasury yield ($TNX) tumbled once again, falling 9 basis points to 1.63%, inching closer and closer to the historic TNX lows that were set in 2012 and 2016. The all-time low came at that 2016 bottom as the TNX touched just below 1.34%. Yields fall when treasury prices rise. So large drops in the TNX can be construed as a major flight to safety.

This flight to safety was also apparent in our equity markets. All of our major indices fell on Monday, led by the Dow Jones' 1.49% drop. The other key indices fell approximately 1.20%. All 11 sectors suffered losses, but the defensive groups easily led on a relative basis. Real estate (XLRE, -0.08%) and utilities (XLU, -0.20%) mostly held their ground, but the same could not be said for financials (XLF, -1.91%). Financials are interest-rate sensitive, typically rising when treasury yields rise. Unfortunately, the XLF, not too surprisingly, is down 5.90% during this month-long drop in yields:

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