XLF: Looming Yield Curve Re-Inversion Suggests Underweighting Financials
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}(window));Seeking AlphaETF Analysis | Financials XLF: Looming Yield Curve Re-Inversion Suggests Underweighting FinancialsFeb. 4, 2020 12:31 PM ET|| About: Financial Select Sector SPDR ETF (XLF), Includes: AON, AXP, BAC, BLK, BRK-B, C, CB, CME, GS, ICE, JPM, MMC, MS, PGR, PNC, SCHW, SPGI, SPY, TFC, USB, WFCby: WingCapital InvestmentsWingCapital Investments Long/short equity, macro, arbitrage, portfolio strategyWingCapital.cls-1{fill:#024999;}SummaryTreasury yield curve is back to the flattest level since Q3 2019 amid renewed fears of global slowdown.
Financials (XLF) have historically underperformed following a re-inversion of the yield curve.
Lackluster earnings growth in its top holdings also suggests limited upside potential in XLF.
We expect XLF to remain bounded by its all-time high set in 2007.
After receiving a jolt from the U.S.-China "Phase One" trade deal, economic optimism has since faded due to the escalating coronavirus... Read more