Equities rising, emerging markets drawing record funds

Stocks in the US rose yesterday. From Reuters:

U.S. stocks rose sharply on Tuesday, driving the Dow and S&P 500 indexes to their highest levels in nearly five years as U.S. bond yields fell and Goldman Sachs Group Inc. reported record profit.

The biggest one-day decline in U.S. Treasury 10-year note yields in six months, following an unexpectedly large drop in February retail sales, helped ease interest-rate worries for stock investors who fear that higher rates will hurt corporate profits.

However, for 2006 so far, emerging stock markets have been the biggest winners, as The Capital Spectator shows. European Emerging, in particular, has risen 17.3 percent through 13 March on a total US-dollar-return basis.

Record inflows of funds have helped emerging markets, as Bloomberg reports:

Emerging-market equity funds have attracted $20.9 billion this year, eclipsing the record inflows they garnered in all of 2005, as faster economic growth and a commodities boom lured investors to markets from India to Russia.

It is tempting to see all this as a euphoric top, but this can obviously go on for a long time if central banks keep pumping liquidity. While the world's three major central banks are now in tightening mode, they are all doing so at a very measured pace.