Rich way research and selectionIn the near futureAn article on "Treasury yields":
Rich way research election | inflation + US bond yields soar, the bull market is coming to an end?
Us bond yields continue to rise. Are US stocks still attractive?
The most recent stock market news in the headlines is that the yield on the 10-year Treasury note has risen to the level of the dividend yield (dividend yield) of the S & P 500 index. The attractiveness of the return on risky assets has declined sharply, leading to a massive sell-off in the growth sectors most affected by higher interest rates caused by inflation expectations.
Although this round of Treasury bond yield rise is close to the dividend yield of stocks.But historically, for most of the stock market, dividend yields have been lower than government bond yields, even in bull markets. From this point of view, the current yield panic is a bit excessive.
In addition, stock market investors pay more attention to earnings per share, and both value investors and growth investors hope that the companies they invest in can maintain sustained earnings per share growth. In that case, the yield (earnings yield) of the S & P 500 will become more meaningful.
The chart below shows the long-term trend of corporate returns in the S & P 500 index from Yardeni. You can seeAccording to the third quarter (the fourth-quarter results are not yet finished), the yield of S & P 500 companies is currently 3.97%, which is 2.73% after deducting the real inflation rate. it is still much higher than the inflation-adjusted yield of 0.23% on 10-year Treasurys (1.47% minus inflation 1.24%).
How do all kinds of assets behave in the same period of history?
Guosheng Securities believes that US debt is currently in a "bear steep" stage, which has happened three times in the past decade.The "bear steepness" of US debt refers to the sharp widening of the 10-year interest rate, the 2-year interest rate, driven by long-end interest rates.
Since 2000, there have been three similar "bear steep" structures, namely, from 2009 to 2010, from mid-2012 to 2014, and this round since Q3 in 2020.
It is not difficult to find that the formation of the "bear steep" structure is related to the impact of critical events.After the severe shock, as the economy gradually stabilized and recovered and inflation expectations rose, the long-end interest rate of US debt took the lead to turn up, while the Federal Reserve continued its loose monetary policy to keep short-end interest rates low. thus showing a more obvious "bear steep" pattern.
Judging from the market performance of various assets in the three "bear steep" periods, commodities and US stocks are clearly dominant, while the dollar index and gold are relatively weak.
From the perspective of specific industries, financial cycle industries have won substantially in the bear steep phase.Financial, industrial, energy and other financial cycle industries tend to outperform the market in the "bear steep" stage, while public utilities, communications equipment and required consumption performance is relatively weak.
It is worth mentioning that on Wednesday (March 3), the financial sector of the US stock market "bucked the trend and hit a new high" against the backdrop of a 2.7% drop in the Nasdaq.
Edit / jasonzeng