Morning Notes — Value

The S&P 500 Value Index (SVX) began a 3-month period of consolidation in early-May when bond yields started to decline.  The consolidation in the SVX was notably shallow given the relatively steep decline in yields.  The SVX was displaying signs of underlying strength and is now breaking out of the pattern as bond yields inch higher.  The near-term target for the SVX is ~1550, which suggests +3.6% upside from current levels.  The upside from 1550 (suspect there’s a lot more) will depend on bond yields and the shape of the yield curve.  Ultimately, those factors depend on the pace of the recovery with delta variant and inflation concerns pulling in opposite directions.