'Real' Bond Yields Are Dipping. Buy Tech and Communications Stocks.

The recent decline in so-called real bond yields looks likely to continue. That makes technology and communications stocks look like solid bets.

Subtracting the latter from the former leaves a real yield of about 2.27%, which is down from about 2.5% in early October. A look at history also bolsters the case for a lower real yield. The 10-year real yield has spent most of the time since the 2008-2009 financial crisis below 2%. That is because bond investors are usually happy to accept only a slim return over and above expected inflation, as long as they are confident that inflation won’t spike higher.

Lower real yields on long-term government debt make that safer investment less attractive, giving people more reason to buy tech shares, which are priced based on particularly long-term forecasts for cash flows. Valuations of tech stocks rise as a result.

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Stock market today: Wall Street drifts after the first of two big updates on inflation this weekU.S. stocks are drifting as yields are mixed in the bond market, which has been Wall...
Source: SFGate - 🏆 534. / 51 Read more »

U.S. stocks eke out 4-day win streak as bond yields fall, CPI on deckJoy Wiltermuth is a news editor and senior markets reporter based in San Francisco.
Source: MarketWatch - 🏆 3. / 97 Read more »

'The bond market is still king': Rising yields sap stocks again and boost dollar‘The market may not have done some of the heavy lifting that some Fed officials have been suggesting,’ said Marc Chandler, chief market strategist at Bannockburn Global Forex.
Source: MarketWatch - 🏆 3. / 97 Read more »

Stock-market moves show bond traders are still in charge as yields renew riseRising Treasury yields may not be doing as much ‘heavy lifting’ as Fed thinks, strategist says
Source: MarketWatch - 🏆 3. / 97 Read more »

Stock market today: Asian markets slip as rising yields in the bond market pressure stocksShares have fallen in Asia after a retreat on Wall Street as the vise tightened from rising yields in the bond market. Hong Kong's benchmark dropped more than 2% as investors were disappointed by the latest Chinese economic data. U.S. futures edged higher and oil prices advanced. On Thursday, the S&P 500 lost 0.6% and the Dow shed 0.5%.
Source: AP - 🏆 728. / 51 Read more »