RYU - Utilities Will Likely Underperform Treasuries

• A low dividend yield for utilities stocks suggests low returns for the remainder of the decade.
• The dividend yield on utilities is now lower than the yields on long-term Treasuries, and this has historically suggested low utility returns relative to bonds.
• The stock market as a whole is likely entering a "secular" bear market, and utilities have a long-term beta near 1, which suggests utilities are also entering a bear market.
• Utilities have had shallower drawdowns than the S&P 500 since World War II, but if we entered a disinflationary bear market, that may point to deeper drawdowns.
• Short-term, utilities are currently on a tear, but once Treasury yields peak, the utilities sector will likely peak, as well.

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