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How Utility Stock Movements Compare with Treasury Yields

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Treasury yields versus utilities

Treasury yields (TLT) rose significantly last week on stronger-than-expected inflation data for December 2017. The rise might nudge the Federal Reserve to boost rates again in March this year on expectations of rapid growth going forward. The benchmark ten-year Treasury yield soared beyond 2.6%, the highest in the last ten months.

XLU treasury ylds

Utility stocks (XLU) (IDU) are seen as bond proxies due to their stable dividend payments. Higher interest rates could make utilities less attractive relative to bonds, so we generally see investors selling utility stocks and switching to bonds in order to obtain higher yields when rates rise.

To learn more about utilities’ recent performances and how they look going forward, check out An Investor’s Guide: A Look at the 10 Largest S&P 500 Utilities.

In the next part of this series, we’ll look at what utilities’ chart indicators are telling us now.

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