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Asset Watch
Thursday, October 12, 2023
Technology stocks are sensitive to interest rates because they typically trade at higher multiples than other sectors, and when rates rise, the re-pricings often lead to larger drawdowns, like in 2022.
To that point, the black line tracks the one-hour movement of the NASDAQ 100, while the green line tracks the inverted (down means up) one-hour movement of the U.S. 10-Year Treasury yield. As you can see, the pair have largely gone in opposite directions since July, with higher interest rates (lower green line) pressuring the index. In contrast, a pullback in the 10Y yield (higher green line) could have the opposite effect in the months ahead.
So, are you buying the ‘rates down, stocks up’ thesis or does the NASDAQ 100’s correction have more room to run?
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