Value gains traction amid rising interest rates

Investors remain optimistic given an improved economic outlook amid accelerating vaccinations, supported by fiscal and monetary stimulus as well as a 10-year high in the J.P.Morgan Global Manufacturing PMI. However, rising inflation expectations and US Treasury yields, which logged their highest quarterly gain since December 2016, put pressure on growth stocks, reinforcing the value trade (Table 1).

• US: Forward 12-M EPS-to-Enterprise Value posted double-digit spreads across large and small caps, with the former group's performance unsurpassed since April 2002
• Developed Europe: Rational Decay Alpha remained the weakest performing Price Momentum measure for a second consecutive month
• Developed Pacific: 2-Year Ahead EPS Growth was an underperforming signal across the region

Emerging markets: Industry Relative TTM Dividend Yield recorded its first positive spread since May 2020

Table 1

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.