A Hawkish Rejection

The market appears to be embracing Janet Yellen's recent hawkish tone, as Treasuries are selling off hard this morning. Regardless of the reason, though, rates are on the rise and it will be interesting to see if equities take it in stride, as usual. 

But with TLT dumping, the rate-sensitive sectors, such as utilities, consumer staples, and REITs, ought to be watched carefully, too. Typically, those sectors tend to be out of favor in a rising rate environment. 

Specifically, the commercial real estate stocks housed in the IYR ETF (for REITs, mainly), below on the weekly timeframe, is losing trend support on the highlighted rising channel dating back to last autumn.

This is a major, not minor, technical development, especially if sellers press under $79. We have been keeping one eye on this setup for Members for a while, to little avail. 

But now that the market is taking Yellen's remarks and tone a bit more seriously, REITs like EQR O PSA SPG are particularly vulnerable on the short side. 

Also note that SRS and DRV are two levered bear ETFs derived from IYR. 

Ultimately, Yellen will need to back up her tough talk with action before year's end for markets to stay on the hawkish path. But there sure is a lot of time between now and the next few Fed Meetings for interesting things to happen on that front.