AGG - Yields Stabilizing A Tight Equity Risk Premium Makes BND Attractive Today
2024-06-22 07:17:41 ET
Summary
- The equity risk premium is 3.3%, historically low, which suggests that stocks are turning expensive compared to bonds.
- I have a buy rating on BND as a long-term core fixed-income holding, given its low expense ratio and high liquidity.
- Technical momentum for BND has improved, with potential resistance at $75 and a bullish upside target to $82 if a breakout takes place.
It hasn’t been this pricey to own stocks over bonds since 2003. At least that’s what one key indicator suggests. The earnings yield on the S&P 500 compared to the real 10-year rate is now just 3.3%. Contrast that to the equity risk premium of close to 10% as was seen at the height of the Great Financial Crisis and during SPX corrections in 2011 and 2012. ...
Yields Stabilizing, A Tight Equity Risk Premium Makes BND Attractive Today