Citi Research analyst Tobias M Levkovich takes a look at investment strategies in a scenario of hardening yields in his research report ‘Hunting for Treasure in Changing Treasury Yields.’
“There is an expectation that bond yields will be moving up over time when comparing the current yield to those provided by the five-year futures contract.”
Bond yields and inter-sector trading opportunities
Strong correlation is observed in bond yields versus certain relative sector performances, for example,
- Tech relative to Telecom Services vs 10-year Treasury (inverse correlation)
- Industrials relative to Utilities vs 10-year Treasury (inverse correlation)
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