XLF - VFH: A 2023 Redux In Play Amid Rising Rates (Rating Downgrade)

2024-02-06 11:16:25 ET

Summary

• The forward rate outlook has changed dramatically in recent days, with US Treasury note yields reaching multi-week highs as interest rate volatility ticks back up.
• Higher interest rates and an inverted yield curve pose risks for the bank-heavy Financials sector.
• The Vanguard Financials Index Fund ETF is downgraded from a buy to a hold due to potential weaker performance.
• I highlight key price levels to monitor on the calendar as bearish seasonal trends get underway.

There have been massive changes in the forward rate outlook just in the last few days. On Thursday last week, the benchmark US 10-year Treasury note yield was approaching the December lows near 3.8%. Jump ahead to this week, and following the January Jobs Jolt and a hawkish 60 Minutes interview with Fed Chair Jerome Powell, rates are near multi-week highs....

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