The yield on the 10 year Treasury finished last week near 5.2%. That is the highest level since 2007, back when Erik Bedard was the ace of the Orioles staff and Wall Street was still insisting that subprime mortgage problems were contained.
Small caps noticed. On Sept. 4 the Russell 2000 was up 20.2% for the year. By Sept. 21 that gain had shrunk to 15.9%, still ahead of the S&P 500 but giving ground fast. Last week the S&P 500 rose 1.2% and the Nasdaq rose 2.1% on another round of artificial intelligence announcements. The Russell 2000 fell 0.8%. Utilities fell more than 3%.
Oil has been doing its own impression of a knuckleball.
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Disruptions in the Strait of Hormuz sent crude up more than 10% between mid August and early September. Last week West Texas Intermediate fell below $93 a barrel on talk of a truce between Washington and Tehran. Nobody knows what next week brings. Anyone who tells you otherwise is selling something.
Momentum has taken its lumps too. The S&P 500 Industrials Index hit a record on Aug. 14 and then fell 6.1% in three weeks as the momentum trade came apart. Bank of America flagged capitulation among its clients, who were dumping industrials at the fastest pace since its records began in 2008.
Look at the 52 week ranges in our own portfolio and you see the same thing in miniature.
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