Bond Yields for ‘New Era’ Lure Dividend Investors From Stocks

Fixed income offers a 180-basis-point yield premium over the dividend returns from stocks, according to data compiled by Bloomberg. That’s the widest in 15 years, and the gap is likely to persist or even widen as traders bet that the era of low rates has come to an end.

Global bonds are offering an average yield of 4.0%, data compiled by Bloomberg show, almost twice as much as the 2.2% dividend return for the MSCI ACWI Index. Fidelity International points out that positive real yields make the case for Treasuries even more compelling. The prospect that borrowing costs may rise further — with Fed minutes published on Aug. 16 showing rate setters remain largely concerned about inflation — has pummeled equities in recent weeks. MSCI’s gauge of developed and emerging market stocks has fallen over 5% so far this month.

This came on the heels of a move by the Bank of Japan in July to loosen its grip on bond yields — a decision that’s expected to boost the yen over time and make domestic assets more attractive. The positive sentiment pushed the yield spread between the bonds and stocks to near the narrowest in more than two years.

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Stock market today: Wall Street rises as easing yields in the bond market relax the pressureNEW YORK (AP) — Wall Street is rising Wednesday as the pressure that's built on stocks recently from the bond market relaxed a bit. The S&P 500 was 1.2% higher in afternoon trading, trimming its loss for what's so far been a dismal August. The Dow Jones Industrial Average was up 203 points, or 0.6%, at 34,492, as of 2:13 p.m. Eastern time, and the Nasdaq composite rallied 1.7%. Big Tech stocks and others that benefit from easier interest rates led the way. They got some relief as the 10-year Tre
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