MSCI USA Cyclical Sectors-Defensive Sectors Spread USD Index vs. 2-Year/30-Year U.S. Treasury Yield Curve This chart suggests that cyclical outperformance of defensives tends to be correlated with the shape of the 2-year/30-year U.S. Treasury yield curve. Image: Morgan Stanley Research
Cyclical to Defensives Stock Ratio and U.S. 10-Year Bond Yield The cyclical to defensives stock ratio suggests higher bond yields. Image: Morgan Stanley Research
ISM Manufacturing PMI vs. Cyclicals/Defensives The outperformance of U.S. cyclicals could suggest that the U.S. economic activity has bottomed. Image: Gavekal, Macrobond
Cyclical/Defensive Equities Ratio vs. 10-Year Treasury Yield The cyclical/defensive equities ratio suggests higher yields ahead. Image: Morgan Stanley Research
Rotation – US vs. non-US Equities, S&P Growth vs. Value, S&P Cyclicals vs. Defensives Is the rotation into value, cyclicals and non-US equities inevitable? Image: J.P. Morgan
Cyclicals to Defensive Stock Ratio and Treasury Bonds Market internals, the preference for large over small and quality over junk, suggest that the recovery will be modest. Image: Morgan Stanley Research
Small Cap Cyclical Sectors vs. Defensive Sectors Median Forward P/E Relative valuations for small-cap cyclicals versus small-cap defensives also remain near the 20-year lows. Image: BofA US Equity & Quant Strategy
U.S. Cyclicals/Defensives vs. ISM Manufacturing PMI Chart showing the large divergence between U.S. cyclicals/defensives and the ISM Manufacturing PMI. Eventually, the gap should close soon. Image: Topdown Charts
Cyclicals vs. Defensives Performance Cyclicals vs. defensives are now two standard deviations from 12M average, as risk-on tone grips stocks. Image: Morgan Stanley Research
U.S. Cyclicals vs. Defensives It’s all about sector rotation: the cyclicals vs. defensives trade is now pricing a growth acceleration. Image: Goldman Sachs Global Investment Research