‘The Party Is Still Going’: Why One Bank Sees 2,900 For The S&P By Year-End
I took some time out recently to describe the extent to which the journey to new record highs for U.S. equities has morphed from an all-out, wind-at-our-backs sprint in January to a slow, arduous grind higher, reminiscent of trudging warily uphill on a hot, breezeless summer day.
If you like short stories or are otherwise inclined to appreciate good writing from the finance bloggers you read (I know, what a concept, right?!), I recently framed this discussion using a vignette about an aborted S
Well as a bond and equity investor who has always preferred a higher bond allocation, I would shift over a large allocation to bonds at 10 year treasury @ 4%. This would put baa 10 year corporates at close to 5.5 – 6% (assuming same compressed spreads, which might actually widen). This would offer some stiff competition to historical long term equity yields.
The crossover threshold is much lower than 10 years ago, before the interest rate drought. Interest rate sensitivity increases the longer a drought lasts. I think in general this is true for many fixed income investors.
Unfortunately, A 10:year treasury at 4% won’t be happening any time soon……:(