Five In Five

March 2025

Five in Five is a monthly publication where we share graphs around five topics that illustrate the current state of the markets, with brief commentary that can be absorbed in five minutes or less.

This month's topics include:

1. Treasury Yields: S&P 500 and Bond Yields
2. Treasury Yields: Gasoline and Bond Yields
3. Value Outperforming Growth YTD
4. Housing Starts Continue to Decline
5. “Not So” Magnificent 7 Underperforming the Broad Market

1. Treasury Yields: S&P 500 and Bond Yields

Source: BTC Capital Management, Bloomberg

• Treasuries have moved lower in lockstep with the drop in the S&P 500.
• This comes despite several high inflation data prints in recent weeks.
• The move makes sense given equity weakness leads to slower growth 3-6 months forward.

2. Treasury Yields: Gasoline and Bond Yields

Sources: BTC Capital Management, Bloomberg

• Gasoline prices can be a good proxy for the direction of Treasury yields.
• OPEC+ increased oil production in a surprise move.
• Oil prices are down 17% in just over a month.
• The S&P 500 drop has hindered expectations for above-consensus gross domestic product (GDP) growth.
• Tailwinds in place for lower bond yields in the near-term.
  
  

3. Value Outperforming Growth YTD

Sources: BTC Capital Management, FactSet

• Year-to-date (YTD), Value stocks have outperformed Growth stocks as the market has transitioned to a more broad-based rally and away from the high concentration in a small handful of stocks.
• This has been a reversal of 2023 and 2024 when Growth significantly outperformed Value.
• YTD, the Health Care, Consumer Staples, and Real Estate sectors have been the best performing sectors, while the Information Technology sector has been among the worst performing sectors.
  
  

4. Housing Starts Continue to Decline
 

Source: BTC Capital Management, FactSet

• Housing starts for January came in lower than expected, continuing to trend lower from highs reached in 2022.
• While unusual weather during January may have caused some disruption in new home starts, the long-term trend since 2022 is very evident.
• Uncertainty over tariffs may influence home builders to pause construction due to higher costs of building materials.

5. “Not So” Magnificent 7 Underperforming the Broad Market

Source: BTC Capital Management, FactSet

• The group of stocks known as the Magnificent 7 have underperformed the broad market thus far, YTD.
• Six of the Mag 7 stocks have negative returns YTD, with the only exception being Meta (Facebook), which is positive YTD.
• Lofty valuations and concerns regarding high expectations of earnings growth have led investors to rotate from the mega cap tech stocks and into other alternatives, such as United States Value stocks and foreign developed markets.

Investment products and services may lose value, are not a deposit, are not guaranteed by any financial institution, and are not FDIC insured or insured by any government agency.

Sources: BTC Capital Management, Bloomberg, FactSet

The information provided has been obtained from sources deemed reliable, but BTC Capital Management and its affiliates cannot guarantee accuracy. Past performance is not a guarantee of future returns. Performance over periods exceeding 12 months has been annualized. This document is intended for informational purposes only and is not an offer or solicitation with respect to the purchase or sale of any security. Statements in this report are based on the views of BTC Capital Management and on information available at the time this report was prepared. Rates are subject to change based on market and/or other conditions without notice. This commentary contains no investment recommendations and you should not interpret the statement in this report as investment, tax, legal, and/or financial planning advice. All investments involve risk, including the possible loss of principal. Investments are not FDIC insured and may lose value.