The sharp rise in Treasury yields since the beginning of the Iran conflict has increasingly weighed on rate-sensitive areas of the equity market, with the pressure intensifying over the past month. Utilities have been among the clearest casualties. As risk-free yields move higher, the relative appeal of utility stocks’ traditionally higher dividend yields diminishes, giving investors an increasingly competitive alternative in Treasuries.
That dynamic has pushed utility underperformance to an historic extreme, with the 126-day rolling return spread versus the S&P 500 falling to -32.42% this week. That ranks as the second-lowest reading since 1940, trailing only the -51.8% recorded in April 1999.
Each Chart of the Week highlights a theme, idea, or historic event that stood out to us. If you find it interesting, feel free to share it with friends or colleagues.
Visit www.tpmarketresearch.com to learn more about our research offering.
