Midstream and MLPs outperformed the S&P 500 this week. Friday’s employment report and testimony earlier from Powell did little to change the outlook for rate cuts to start in June. Midstream underperformed utilities and infrastructure, both big winners that benefitted from lower interest rates this week, but also benefiting from what feels like a shift in sentiment from the dawning realization that all this technology growth requires power and infrastructure.
Midstream has a role to play in some of that power demand that will result in natural gas demand. But for now, midstream stocks aren’t being bought for that second order theme. Utilities probably aren’t being bought on the load growth theme much either, but after such a long trend of selling utilities on interest rate pressure, the lack of selling and some modest uptick in sentiment can make a difference, and it may have this week.