Tuesday, 29 March 2016

US stocks little changed as dividend yield beats 10-year Treasuries

US stocks were little-changed on Monday, with the S&P 500 rising less than 0.1 percent.

That could mean that stocks remain relatively cheap.

A CNBC report on Monday noted that the US 10-year Treasury yield was below 1.9 percent while the S&P 500 dividend yield was 2.1 percent.

This is the reverse of the pattern in the modern era, when the 10-year Treasury yield has generally been higher than the stock market's dividend yield.

To Convergex strategist Nicholas Colas, this means that "stocks still look attractive versus bonds".

However, Boris Schlossberg, strategist at BK Asset Management, pointed out last week that back in the 1920s, people considered stocks more risky and required higher dividend yields than bond yields.

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