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Sector Rotation Amid Anticipated Fed Rate Cuts: Utilities Vs. Financials
336 Views13 Aug 2024 12:17
SUMMARY
- XLF Decline Post Rate Cuts: The Financials Select Sector ETF (XLF) declined by an average of 5.6% in the six months following the last three monetary policy pivots.
- Credit Delinquency Risks: Rising credit card delinquencies, now at 10.93% for severe cases, pose a significant risk to financial firms within XLF, potentially amplifying their underperformance as rates decline.
- Utilities Sector Advantage: Utility companies tend to outperform during rate cuts due to reduced debt payments, with the sector seeing a ~6% spread increase compared to the S&P 500.
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