Longer-term bond yields have been trending higher since mid-September, a development that may be surprising some investors given that both the U.S. Federal Reserve and the Bank of Canada have cut their key interest rates by half a percentage point during that period.
is declining and the economy in the industrialized world outside the United States does not look great. These are good conditions for fixed income. Bonds will not likely yield outsized returns, but they remain a steady, low-risk investment.by a half-percentage point to 3.75 per cent last week was largely expected and had little discernible effect on mid- and long-term bond prices.
I expect U.S. 10-year Treasury yields to remain in their 3.5-per-cent to 5-per-cent trading range for some time, with a higher probability of breaking below 3.5 per cent than breaching 5 per cent. My two favourite long-term equity valuation indicators – the Buffett Indicator and the Shiller cyclically adjusted price-to-earnings ratio – are indicating a strongly overvalued U.S. equity market. is assured but is far more probable than when these indicators show undervaluation or fair valuation. These are not timing tools. However, they are at levels that have only been higher before the dot-com crash at the turn of the century.