Morning Notes — Technical Levels and Near-Term Narrative

Bond yields will drive the near-term narrative as the 10-year approaches its 2020 high of 1.877%.  We keep a Q1 target of ~1.90%, but see the 10-year tracking toward ~2.20% in the near-term, with the potential to extend toward the cycle high near ~2.50% sometime in Q2/Q3. Last week, we also discussed our expectations for curve flattening, with the potential to challenge value sector rotation in the back half of Q2.  We expect multiple compression in the Tech sector will continue at a slower pace, primarily driven by better earnings rather than rerating.  The rerating in SaaS stocks will slow as the average now falls in the ~10x revenue range and see a fundamental buying opportunity potentially developing for a handful of names in late Q1.