Today's wide dispersion
in equity yields across global markets provides tremendous opportunity for investors willing to look beyond the seemingly safe U.S. equity market with its high prices and low yields.
Not exact matches
LONDON, April 30 - The 10 - year U.S. Treasury
yield's rise above 3 percent last week for the first time
in over four years may be cause for concern across wide swathes of financial markets, such as
equities and emerging markets.
The
equity rebound comes despite a rise
in the U.S. 10 - year
yield to a fresh four - year high as President Donald Trump sent a request to Congress for $ 200 billion to support a $ 1.5 trillion infrastructure plan.
The bank added that if high inflation expectations and the global growth environment continues,
equities should hold up despite the rise
in yields.
On Wednesday, bond
yields in both the U.S. and Germany reached highs on the year, which likely helped trigger a selloff
in equity markets Thursday.
A sharp rise
in yields earlier this month sparked a widespread sell - off
in equities, sending the Dow and S&P 500 into correction territory before partially recovering.
«If we assume extremely pessimistic nominal earnings growth of 3 % over the coming decade and a compression
in the price - earnings ratio to 10,
equities would still deliver returns above current bond
yields.
When you purchase a broad swath of
equities, say an S&P 500 index fund, the returns you can expect over the next decade or so comprise four building blocks: the starting dividend
yield, projected growth
in real earnings per share, expected inflation, and the expected change
in «valuation» — that is, the expansion or contraction
in the price / earnings (P / E) multiple.
The rise
in bond
yields, which investors fear could hurt
equities, has been partly fuelled by the spike
in crude oil prices, which on Tuesday crossed $ 75, boosting energy shares.
«If we get a hot CPI print it will insert additional uncertainty, but if we get a quiet, below - consensus print, you may see
yields down and
equities rally,» said Jason Ware, Chief Investment Officer & Chief Economist at Albion Financial Group
in...
Orange Capital makes investments
in value
equity, high -
yield and distressed debt, and secured loans, according to the fund's brochure document.
Dividend stocks that
yield more When it comes to
equities, high - paying dividend stocks, especially
in the utility and REIT sectors, have been the go - to investment of late.
Lewis, fund's chief investment officer, spent nine years at Citigroup as a director of the bank's global special situations group, a $ 5 billion prop - trading group that specialized
in distressed debt, high -
yield bonds, and value
equity.
A negative outcome
in the stress tests could send
equities lower and Greek bond
yields higher.
«
In the current environment, although inflation appears to be increasing, it's still not likely to cause 10 - year
yields to rise to levels that would be problematic for
equities.
All told, the jump
in Treasury
yields has yet to make its way into the broader economy
in the form of higher borrowing costs, yet it will likely start to dampen the housing and auto markets as consumer loans become more expensive, said Gary Cloud, a portfolio manager of the Hennessy
Equity and Income Fund.
Most investors shy away from bonds because they
yield (or return) less than
equities and tend to be more complex
in nature.
«If we get a hot CPI print it will insert additional uncertainty, but if we get a quiet, below - consensus print, you may see
yields down and
equities rally,» said Jason Ware, Chief Investment Officer & Chief Economist at Albion Financial Group
in Salt Lake City, Utah.
On Monday, investors rushed into Treasuries as the S&P 500 and Dow Jones Industrial Average nosedived more than 4 percent - reversing a move on Friday when a spike
in bond
yields, which move inversely to prices, triggered an
equity rout.
LONDON, April 30 (Reuters)- The 10 - year U.S. Treasury
yield's rise above 3 percent last week for the first time
in over four years may be cause for concern across wide swathes of financial markets, such as
equities and emerging markets.
Certainly, it offers an attractive level for longer - term investors such as pension and insurance funds to lock
in a relatively decent
yield, and will tempt some portfolio managers to buy bonds rather than
equities.
Though currently bank
equity investors are cheering the steepening of
yield curves, meanwhile, the 2003 Japan episode should fix regulators» attention on the growing home - bias
in government bonds.
However, when considered as an alternative to classic
equity financing, token sales
yield a > 100X increase
in the available base of buyers and a > 1000X improvement
in the time to liquidity over traditional methods for startup finance.
But cross-country differences
in equity returns declined to pre-crisis levels while the range of
yields on debt securities issued by banks and by non-financial corporations also narrowed, suggesting that there is some integration at least
in prices of financial instruments.
Traditional high -
yielding stocks may not play proper defense
in equity portfolios as interest rates rise.
yields will hit the highs on close end of the day...
equity markets setting up to be slammed tomorrow maybe but today they have run over weak shorts
in the face of rates... the federal reserve see's this and again will wonder if they are behind on hikes, strong data, major expansion
in credit, lack of wage growth rising bond
yields and ballooning debt... rates will go much higher and
equities will have revelations as to what that means for valuations
In the European market, the oil sector has a high dividend
yield of about 6 percent — the highest there is — which adds up to real value, says Nick Nelson, head of global and European
equity strategy at UBS.
A move up
in the US 10 - year bond
yield (2.965 % - 2.995 %) and mostly firmer global
equities were a headwind for gold.
The Total Return approach used
in our Global
Equity Strategies emphasises the importance of dividend
yield and dividend growth as well as price increases.
In essence, investors who reinvest their dividends accumulate more shares during stock market collapses as the dividend
yield expanding allows them to gobble up more
equity with each dividend check they shove back into their account or dividend reinvestment plan.
Trading across U.S. government bond maturities was range - bound on Wednesday, with
yields little changed
in spite of gains
in the
equity market
in the last few sessions.
In addition to long - duration Treasuries, these classic «safe havens» include high - yielding defensive equities like utilities, as well as precious metals, both of which are sensitive to changes in real interest rate
In addition to long - duration Treasuries, these classic «safe havens» include high -
yielding defensive
equities like utilities, as well as precious metals, both of which are sensitive to changes
in real interest rate
in real interest rates.
Is n`t — do n`t you think there will come a time when the
yield on the 10 year will start to provide some competition from the
yields in the stock market and that will have a problem for
equity investors?
The global synchronized economic expansion, a business - friendly administration
in Washington, solid corporate credit quality, modest default activity, robust
equity markets and a favorable supply - demand balance set a strong backdrop for high
yield in the New Year.
In addition to high
yield credit, Highland's investment capabilities include public
equities, real estate, private
equity and special situations, structured credit, and sector - and region - specific verticals built around specialized teams.
Our Real Estate professionals are seasoned experts
in sourcing, analyzing, structuring and monetizing real estate investments
in distressed debt, high -
yielding senior loans, direct
equity and hybrid investments, among others.
A high quality muni - bond portfolio can
yield close to 4 % tax free, with inflation essentially not existent and
equities at an all time high I'm curious if there is a flaw
in my logic?
At the start of the sustained rise
in equity prices, stock dividend
yields exceeded the
yields on Treasury bonds and this was perceived as normal, partly reflecting the searing experience of the Great Depression.
Against this environment, our strategists remain bullish on
equities and continue to favor emerging market currencies and,
in the fixed income space, prefer local markets over external debt and maintain their higher -
yielding yet better - quality bias.
In other words,
equity dividends are higher by a third of a percentage points than quality bond
yields, and that's before the dividend tax credit and before any capital gains.
To the extent any rise
in bond
yields is modest and gradual, these same developments would be positive for
equity markets.
Easy monetary conditions should keep
yields compressed
in the near term and support risk assets, including European credit and
equities.
The era of cheap or zero - interest money that led to a wall of liquidity chasing high
yields and assets —
equities, bonds, currencies, and commodities —
in emerging markets is drawing to a close.
The Carlyle Group («Carlyle») is one of the world's largest global alternative asset management firms that originates, structures and acts as lead
equity investor
in management - led buyouts, strategic minority
equity investments,
equity private placements, consolidations and buildups, growth capital financings, real estate opportunities, bank loans, high -
yield debt, distressed assets, mezzanine debt and other investment opportunities.
To learn more about the high dividend
yield factor in a rising interest rate environment, use the link below to download our paper, «Harvesting Equity Yield&ra
yield factor
in a rising interest rate environment, use the link below to download our paper, «Harvesting
Equity Yield&ra
Yield».
I side with Ben
in the sense that if one is trying to exploit negative correlation between
equities and Treasuries, the
yield is a secondary point.
These behavioral finance influences can skew a portfolio's overall allocations toward an overemphasis of potentially higher -
yielding equities that
in some instances may represent more downside risk than upside potential at current valuation levels.
Our Global Market Strategies segment, established
in 1999 with our first high
yield fund, advises a group of 46 active funds that pursue investment opportunities across various types of credit,
equities and alternative instruments, including bank loans, high
yield debt, structured credit products, distressed debt, corporate mezzanine, energy mezzanine opportunities and long / short high - grade and high -
yield credit instruments, emerging markets
equities, and (with regards to certain macroeconomic strategies) currencies, commodities and interest rate products and their derivatives.
We invest
in countries around the world at all levels of the capital structure — from debt (first lien bank debt, second lien loans and high
yield bonds) to undervalued
equity.
When the stock market dividend
yield yields more than a 10 - year US treasury bond
yield, it's generally a good sign to invest
in equities.