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
Secular Growth Stocks Relative to Defensive Stocks More downside ahead? This chart suggests that secular growth stocks are at risk. Image: Morgan Stanley Research
U.S. Stocks – Cyclicals vs. Defensives Investor sentiment is often reflected in the performance of cyclicals versus defensives. Typically, expectations of economic growth lead to a preference for cyclicals, resulting in their outperformance relative to defensives. Image: Goldman Sachs Global Investment Research
Stocks – Cyclicals vs. Defensives Cyclicals and defensives are useful indicators of investor sentiment. As investors expect economic contractions, they often shift towards defensives, resulting in their outperformance compared to cyclicals. Image: Goldman Sachs Global Investment Research
Stocks – Global Cyclical Relative to Defensive Sectors vs. U.S. 10-Year Yields Is now the time for defensive stocks? Image: Longview Economics
Cyclical Stocks – World Cyclicals vs. Defensives Around Bear Markets Cyclicals have recovered vs. defensives, in line with the average recovery, but they have lagged the post-GFC recovery. Image: Goldman Sachs Global Investment Research
U.S. 10-Year Treasury Yield vs. Cyclical/Defensives Stock Ratio The recent rise in the cyclical/defensives stock ratio could suggest a rise in 10-year yields. Image: Morgan Stanley Research
10-Year U.S. Treasury Yield vs. Cyclical to Defensives Stock Ratio The divergence between the 10-year U.S. Treasury yield and the cyclical to defensives stock ratio suggests higher yields ahead. Image: Morgan Stanley Research
Performance of U.S. Growth vs. Value Stocks, U.S. vs. non-U.S. Equities and S&P Cyclicals vs. Defensives Equity rotation are delivering for non-U.S. vs. U.S. markets and Cyclicals vs. Defensives, but not for Value vs. Growth. Image: J.P. Morgan
Indexed Return of Cyclicals vs. Defensives and Consensus Forward 4-Quarter U.S. GDP Growth The relative performance of cyclical stocks versus defensives currently signals market expectations for real U.S. GDP growth of 2%, below Goldman Sachs’ 2.6% forecast for 2026. Image: Goldman Sachs Global Investment Research
Cyclicals vs. Defensives – 12-Month Forward P/E Premium Cyclical stocks are leading the way in 2025, leaving defensives behind as optimism returns to markets. In the U.S., that surge has lifted cyclicals to a valuation premium over safer plays. Image: Goldman Sachs Global Investment Research