Morning Notes — Bond Yields

Bond yields: Ten-year Treasury yields are extending below first technical support in the 1.62%-1.64% range.  Closing levels are far more important, but an intraday yield of ~1.54% has us anticipating a test of strong secondary support at ~1.45%.  

Cyclical/value: The downtick in bond yields this morning has yet to translate into rotation away from cyclical/value sectors. However, growth sectors are outperforming with the NDX successfully extending beyond its previous high at 13,808.  The NDX should be able to generate more upside toward ~14,300 before it struggles to move meaningfully higher.  The corrective action in the S&P 500 Value Index (SVX) took place more than two weeks before the recent, near-term peak in bond yields.  Investors should use residual strength in growth as an opportunity to more aggressively tilt portfolios toward cyclical, value and small-cap names.