US stocks struggled to hold onto early gains overnight following a reversal higher by bond yields but encouragingly the NASDAQ still edged higher even as US 2-year yields traded back towards 4.9% bringing with them increased economic risks of a recession. The S&P500 was up almost 1% early in the session before ending up just +0.1%.
- We believe tech stocks are holding up well with bond yields edging ever higher, for the NASDAQ to hit our 13,500 target area we are probably going to need yields to soften.
- We believe growth stocks will outperform value over the coming months with “higher for longer” interest rates already largely built into the market.
MM remains cautiously bullish on US equities through March
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The Russell 2000 small caps index again underperformed overnight illustrating its vulnerability to rising bond yields.
- One of the reasons we remain cautious towards equities medium term is the current lacklustre performance by the small caps, usually a good measurement of liquidity in the equities space.
MM is neutral towards the US small caps
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