Christian Fromhertz
CEO of Tribeca Trade Group, Momentum Trader, Ex-BAML ETF Director
Low-volatility and yield-replacement stocks are falling because rising bond yields make Treasuries a better source of income. Utilities, staples, health care and real estate drop when rates rise, so low-volatility names that usually outperform in turbulent markets are underperforming. Unusually, long Treasuries are falling as the VIX rises, unlike 2008 or 2020, because financing the war is increasing deficits. x.com x.comÂ
Low-volatility, utility, consumer staples and health care stocks are falling fast because bond yields are ripping higher. These sectors serve as yield replacements, and when investors can get yield in Treasuries they sell them, which is why so-called low-volatility equities are suddenly acting like high-volatility ones. x.comÂ
Long-dated Treasuries are the safe-haven trade again as money rotates into yield. With the 30-year paying over 5%, holding non-yielding assets is harder to justify; after the Fed held, yields fell across the curve and TLT rose 1%. x.comÂ
High Treasury yields keep US real-estate stocks from being a buy yet, despite a record low against the S&P 500. Each hike pushes the sector lower; the 10-year yield above 5% argues for waiting rather than assuming rotation is inevitable. A turn likely needs falling rates, perhaps a first cut or the 10-year back below 4%. x.com x.com x.com x.com x.com x.com x.com x.com x.com x.comÂ
US consumer staples look good here as a safe-haven play. x.comÂ
Falling Treasury yields reinforce the growth-scare thesis and mark a bullish turn for long-dated Treasuries. The 10-year yield is breaking below 5% as TLT rallies. x.comÂ
Hyperscaler credit stress and weak financials-versus-staples leadership warn of downside risk in the S&P 500 consolidation. Spreads have broken July wides, though an upside breakout is probable if financials stabilize. So far, tech weakness has lowered yields as Fed hikes are priced out, letting defensives rally and the S&P chop. If the Fed signals Nasdaq weakness won't stop tightening without better data, the tech-yield link could break in an uncomfortable, 2018-like direction. x.com x.com … Show more
Long-dated Treasuries are attractive at about a 5.2% yield, which looks like what it takes to draw domestic buyers to replace foreign demand. @acemoney21 argues the supply-demand imbalance is real as China and the EU leave Treasury auctions, so Americans must be incentivized with 5% risk-free yields, and that curve steepening is part of the administration's plan. Locking in about 5% on part of a portfolio for the next 20 years is appealing. x.com x.comÂ
Long-dated US Treasuries show textbook capitulation, suggesting the 10-year yield is near a temporary top. Long bonds have closed below the lower Bollinger band for five straight days on rising volume, with implied-volatility rank at an extreme, a sign of extremely crowded shorts. High rates do little to restrain highly profitable companies such as big tech and semiconductors. x.comÂ
Economic projections for falling inflation and rising unemployment leave December as the only window for another Fed hike, exposing long-dated Treasuries to more selling as yields rebound. Treasury buying has cooled yields ahead of the midterms, but yields should rise again with stocks and crypto through year-end. The subsequent liquidity shift should bring bearish volatility at first; then TLT should break above 81-82 as the Fed turns to cuts of at least 50 basis points by March 2027. x.comÂ
Long-dated Treasuries could put in a bottom, with 10-year yields topping, over the next couple of weeks, though not with an explosive recovery like April 9, 2025. Per another investor, the 20+ year Treasury ETF drew $1.7 billion of inflows last week, its fourth-largest weekly inflow since June 2024, after a record $5.6 billion in August. x.comÂ
The US large-cap correction isn't over until interest rates top and bonds bottom, which hasn't happened yet. The summer 2023 S&P 500 correction ended right when bonds bottomed in October, with TLT trading massive upside volume, and there is no sign of that now. Higher rates keep pressuring real estate, where lots of money has been trapped since 2022, a possible source of downside dislocation, and an aggressive further rise in rates could bring a panic bottom. x.com x.com x.com x.com x.com x.comÂ
