Relative Strength of Stocks vs Bonds

Each morning in our Daily Morning Lineup, one of the charts we include is the relative strength of stocks vs bonds (treasuries) over the last year.  When the line is rising, stocks are outperforming bonds, and when the line is falling, bonds are outperforming stocks.  As the chart below illustrates, since June of last year the line has made a series of lower highs, indicating steady outperformance of bonds.  Following yesterday's rally in stocks and the sell-off in bonds, however, there are some signs that this trend may be shifting.  As shown below, yesterday's trading has resulted in a break of the downtrend where stocks have underperformed bonds.

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