When we consider the ructions in bond markets over recent months the performance by US growth stocks i.e. Tech & Healthcare has been relatively impressive even if they have felt “wobbly” at times. The most recent 2 “Bond Tantrums” saw far more aggressive moves by both sectors yet this year when yields have remained high and global central banks have indeed started hiking rates the impact has been comparatively small. These respective moves come down to expectations, especially over the short-term, we feel the current situation can be interpreted in 2 very different ways:
- The ability of growth stocks to withstand the surge by bond yields is another solid bullish read through if only short-term.
- The bull market is holding on by its finger nails waiting for the straw to break its proverbial back.
MM is still leaning towards the first interpretation although we do acknowledge that the more than doubling by the sector since Q1 of 2020 makes growth stocks vulnerable to sharp corrections under profit taking & momentum trader style selling – we remain comfortable with our “buy the dip & sell the pop” adage into 2022.
