For the first time since 2009, the 3-month U.S. Treasury bill rate is now higher than the yield on earnings derived from generally accepted accounting principles for companies in the S&P 500 Index. That’s according to Ed Clissold, chief U.S. strategist, and Thanh Nguyen, senior quantitative analyst, at Ned Davis Research.
After a dismal year for both bonds and stocks in 2022, high-quality fixed income such as T-bills and investment-grade corporate bonds are having their moment — offering what investors see as better competitive returns. The Fed’s determination to restore price stability is pushing T-bill rates to multi-year highs, while putting a dent in the performance of most U.S. stocks in 2023, aside from the Nasdaq Composite Index COMP , which is up 20.5% this year.
“After a decade of TINA ” to equities, “markets have transitioned to TARA ,” Clissold and Nguyen wrote in their note. They cited the three month T-bill rate’s yield of more than 5.2% versus the S&P 500 GAAP earnings yield of 4.88% .