Investors Pull the Plug on Utilities as US Treasury Yields Rise

Utilities continue to look less appealing with safer U.S. Treasury yields rising, and technicals show Treasurys yields will probably keep rising. Two weeks ago the Dow Utility Average had a positive but overbought weekly chart. Since then, utilities have had a momentum power-outage and last week's close was technically negative. This should not be a surprise to investors who follow my coverage of utilities. On Jan. 16 I wrote How to Trade: Book Profits on Utilities, Then Buy These 5 Dividend Stocks.

The main reason for weakness in utilities is the rise in longer-term U.S. Treasury yields. Yields have been rising since the end of January, making a 3% dividend yield on the Utility Sector ETF no longer compelling. The U.S. 10-year Treasury yield (2.030%) traded as low as 1.637% on Jan. 30 and tested its 50-day simple moving average at 2.019%. The 200-day simple moving average is a key support at 2.356%. The weekly chart will favor higher 10-Year yields given a close on Friday above its key weekly moving average at 1.977%.

Source: The Street

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