Last summer there was a broad consensus that the only way was up for interest rates. We disagreed and told that " the only way is up" applied more to bond prices than to interest rates. We expected long rates to decline due to disappointing economic growth figures and easing inflation numbers.
As a logical consequence, we wrote positive articles on the interest-rate sensitive sectors Utilities and Real Estate.
Long-term interest did indeed go down and both Utilities and Real Estate performed well.
As a result, both sectors look overvalued compared to their