This Is How Energy Comes Back Into Leadership
The yield curve is turning up, and energy relative strength is doing what it’s done before every major run.
This chart is doing something most people miss: it’s not trying to “predict oil.” It’s showing you when the market tends to pay you for owning energy.
This is Exxon’s relative strength against the broad market. When the line is rising, energy is outperforming stocks. When it’s falling, energy is dead money relative to everything else.
Look at the big regimes:
2000–2003: XOM relative strength turned up hard. That was the early cycle / reflation window. Energy became leadership.
2007–2009: another relative spike (then the crisis hit and everything reset).
2020–2022: major turning point. Energy went from hated to dominant, and the relative trend screamed higher.
Now zoom into the right side: since 2023, XOM’s relative strength has chopped and cooled off, but it hasn’t broken down. It’s acting like a digesting uptrend—higher lows, compression, and a setup that often precedes the next relative leg higher. That green arrow on the far right is the question the market is asking: is this base the launchpad?
This is the macro “weather.” When the curve is falling and going negative, growth expectations are getting wrung out. That’s when markets hide in defensives and duration narratives. But when the curve bottoms and starts rising (green arrows), you’re usually transitioning toward a steepening / reflation phase.
Notice the pattern: the yield curve mean-reverts. It gets stretched, snaps back, and that snapback is where cyclicals—including energy—tend to reassert leadership.
Right now, the curve is coming off an extreme inversion and pushing back above zero. If that continues, the macro backdrop shifts from “slowdown fear” to “pricing power + real assets.”
So the message is simple:
If the yield curve is turning up AND energy relative strength is basing… now might be the time energy stops being a trade and starts being a theme again.
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