Stock markets have ground higher through 2021 but the real action has been under the hood on the stock and sector level as rising bond yields has seen a strong pick up in banks & resources, especially on the ASX. We are looking for more rotation in the months ahead with the performance likely to be determined by the $US and US bond yields:
- Short term – we are looking for continuation of the recent outperformance by the Australian tech sector as we target a low in the $US and washout to the downside by bond yields.
- Medium / long term – we remain bullish the “reflation trade” believing that interest rates will rise and inflation will continue pick up, this will create on ongoing tailwind for banks and resources
MM is believes tech stocks will continue to regain some of their recent underperformance short-term
