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CBOE US 10- Year Treasury Note Yield (TNX.I) & iShares US Industrials ETF (IYJ)

US traded interest rates have started to rise once again this week, with the 10-year treasury note yield regaining 3.80%, which has sparked a rally in the US Dollar and put a bit of a headwind in front of stocks, commodities and non-US currencies including Gold.

A number of factors have combined recently to shift expectations about US interest rates toward the hawkish side since the start of this month. The Fed continues to signal its intentions to keep raising interest rates even if at a slower pace and to keep rates high even after it pauses while it continues to fight inflation. Economic indicators like Canadian job growth, US nonfarm payrolls growth, and US retail sales suggest that the North American economy remains robust. The US Consumer Price Index did not decline as much as investors had hoped last month, suggesting the inflation fight could potentially drag on. Finally, Fed Vice Chair Brainard has left the US central bank to take a job at the White House, removing one of the historically more dovish voices from the FOMC.

The coming week is shortened by a Monday holiday in both the US and Canada. The main economic event of the coming week is Flash Manufacturing and Service PMI reports on Tuesday, the first peek at February economic conditions. The slate is otherwise dominated by more inflation, retail sales and housing reports from the US, UK, and Canada.

Earnings season has moved into its later innings. Retailers dominate the calendar starting with Canadian Tire today and then shifting stateside with Walmart and Home Depot reporting on Tuesday.

In this edition of the Equity Leaders Weekly, we look at the implications of the recent upturn in the US 10-year Treasury Note Yield, and at recent gains in cyclical sectors including industrials.

CBOE US 10- Year Treasury Note Yield (TNX.I)

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