Morning Notes — Support Levels and Sector Outlook

Ten year yields are currently trading at 1.72% with mild resistance in the 1.90%-1.94% range, but the real number is ~2.20% with the potential for ~2.50% over the next quarter or so.  Real yields broke up and through our predetermined value/growth trigger of -0.92 yesterday and now at -0.76. Real yields above -0.92 will put further pressure on Tech/SaaS multiples and may lead to accelerated rotation into value sectors, particularly Financials and Energy. Given our outlook for a sustained global economic cycle, its more likely that Tech/SaaS multiples compress on better earnings and relatively stable enterprise values. Either way, the pendulum has firmly swung in favor of value sectors.