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"Don't hope. Hope is for people who aren't prepared.”
― Kareem Abdul-Jabbar
Utility stocks have often been considered a bond proxy (or the other way round, depending on out of which corner of the macro world you consider this. And as you can see on the larger chart below, at least visually there seems to be indeed a decent correlation between the iShares US Treasury 20+ Year Bond ETF (grey) and the Utilities Select Sector SPDR ETF (red). Until very recently that is …
Is the divergence a message that the bond sell-off could be ending or is it more a Utilities stocks specific rally? We think it is much more of the latter, but in any case, with positioning in Utilities stocks at an absolute rock bottom (see inset chart), the rally could suddenly start further acceleration.
We then ask the question: Is one of our best AI ideas to buy Utility stocks?
