PAIR TRADE: XLU vs. XLF

Pair Trade:

Long XLU @ $69.18

Short XLF @ $41.10

5% each side

This is a continuation of my thesis that rates are heading LOWER. Banks benefit from higher rates - which usually means bigger interest rate spreads and earnings. Utilities act much like fixed income, perhaps TIPS, and are worth more as rates decline.

Thus, this pair trade is an interest rates call - in addition to an equity markets might move lower from here call.