With Treasury rates backing up once again, we've seen a major reversal in stocks, with Consumer Discretionary shares (XLY; bottom chart) leading the downside. As noted yesterday, this is a paradigm shift; where rising rates had been a healthy sign of risk appetite earlier (exiting Treasuries, buying riskier assets), now those soaring rates are viewed as a threat to the consumer and the prospects for economic recovery, not least because of their threat to housing (XHB; top chart).
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