The relationship between the yields on short- and long-term bonds is normalizing after being more topsy-turvy earlier in the year. That’s a positive signal for the economy, and it that means select groups of stocks will benefit.
The difference was even steeper earlier this year. In early March, the yield curve hit a low of just over negative 1%. Since then, the bond market has gotten more optimistic that economic demand may not sink that much over the long-term. Already, the Vanguard S&P 500 Value Index exchange-traded fund has performed decently, gaining just over 2% since early March, while the Russell 2000 Growth Index down is a touch since then.
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