Value Rotation After Jobs

What Happened

• Value and dividend sectors outperformed as yields stayed elevated.
• The dollar firmed, pressuring EM FX and high beta currencies.
• Treasury breakevens were steady, keeping inflation expectations anchored.
• Energy held recent gains while tech lagged.

What It Means

• The rate backdrop still favors cash flow over duration.
• A firmer dollar tightens conditions at the margin for EM.
• Stable breakevens suggest inflation anxiety is contained.

What I Think

• I prefer a barbell of value and quality defensives into CPI.
• If yields fall after CPI, growth can stage a quick comeback.
• Until then, the rotation theme remains intact.

Market Terms

• Breakevens - Market-implied inflation expectations from TIPS.
• Value tilt - Portfolio bias toward cheaper, cash-generating stocks.
• EM FX - Emerging market currencies.