“According to Mark Newton of Newton Advisors, the XLU recently broke above a downtrend in place since the start of 2015. That move coincided with increased uncertainty regarding interest rates. He expects the rally in utilities to extend,” reports Yahoo Finance.
Some investors see opportunity with rate-sensitive assets such as XLU and real estate ETFs, noting that 10-year yields are overbought and sentiment against the likes of XLU is at bearish extremes, which could create opportunity from the long side with the utilities sector. [Rethinking Rate Sensitive ETFs]
Treasury yields rise and the utilities sector falls. With market participants pricing in an interest rate hike from the Federal Reserve, perhaps as soon as this month, the rising yields/slumping utilities sector scenario is playing out. [Crunch Time for Rate-Sensitive ETFs]
“Given that we continue to be in an environment where yields are dropping, continued amounts of confusion with central bank policy, and overall volatility in the stock market, this still looks like an excellent sector to overweight in thinking that additional outperformance should happen in the months ahead,” Newton told Yahoo Finance.
Utilities Select Sector SPDR
