• Christopher Wood, global head of equity strategy at Jefferies, pointed out an ongoing shift in investor preference from growth to value stocks as rate hikes by the US Federal Reserve loom in the wake of rising inflation.
  • The change in equity market leadership looks ever more pronounced in terms of the shift from growth to value stocks as investors have discounted ever more rate hikes following last week's higher US inflation, Wood said in the Jefferies Greed & Fear report.
  • The report says since mid-November, value stocks have outperformed growth stocks by 16.1%. The US high yield corporate bond yield spread rose to 3.67% last Friday -- highest level since December 2020 -- and is now 3.54% from 2.7% last December. The brokerage firm said that the result is rising Fed tightening estimates and even conjecture that it may raise rates by 50 basis points at its March meeting.
  • It added that the monetary tightening is not only about the rate hikes but also balance sheet reduction and, as discussed previously, quantitative tightening is in many respects a blunter instrument and a process more likely to spook markets.