📊 Bond Stress Raises Risk

Good Morning Investors,

Markets softened as risk appetite cooled. U.S. and Canadian benchmarks drifted lower alongside a broader pullback in equities, with technology weighing on performance. Macro headlines are setting the tone. Fed pushback against near term rate cuts is lifting uncertainty ahead of the delayed January jobs report, keeping volatility elevated. That backdrop is pressuring tech in particular, as a high profile downgrade of the U.S. IT sector and renewed chatter around software earnings risk raise downside concerns for smaller, rate sensitive names.

Credit signals are the key watch. Stress in the U.S. bond market could translate into higher funding costs for issuers, amplifying winners and losers. On the upside, domestically focused businesses and resource or AI adjacent names may regain leadership if flows rotate back into risk, especially with overseas AI firms eyeing U.S. listings. The takeaway is selectivity: earnings driven setups, balance sheet quality, and tangible catalysts matter more than broad beta in this environment.

Matthias Schneider
Editor at Analytica Investor