LIVE MARKETS-Tech vs Banks: Has the switch flipped?

Reuters2021-06-11

* U.S. equity index futures slightly green

* Euro STOXX 600 index up ~0.6%, new record highs

* Dollar, crude up; gold down; bitcoin up ~2%

* U.S. 10-Year Treasury yield ~1.46%

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TECH VS BANKS: HAS THE SWITCH FLIPPED? (0900 EDT/1300 GMT)

Since tech peaked vs financials and banks in September of last year , growth has been on the back foot vs value. However, with the U.S. 10-Year Treasury yield hitting 3-month lows, tech, and growth, are enjoying a bit of a reprieve vs banks and value.

Indeed, the tech /banks ratio is currently on pace for its best weekly performance since mid-January. On a monthly basis, it is tracking its biggest rise since August of last year.

That said, tech may still have work to do on the charts to suggest a more enduring relative low vs banks is in:

The ratio is attempting to turn up well ahead of a 15-year log-scale support line, as well as the Y2K tech bubble and financial crisis peaks, which should now also act as support levels.

However, the ratio remains well below its descending 200-day moving average.

There certainly is room for a greater relative comeback, if the ratio rises to close the gap with this long-term moving average. But until the 200-DMA is reclaimed, and its downward slope at least eases, tech could ultimately still be in for more trouble, or further volatility, relative to banks.

(Terence Gabriel)

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)

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