When Defensive Stocks Are No Longer Defensive

By: ETFdb
A confluence of factors helped U.S. equities rebound more than 12% from their October low, pushing valuations to their highest level since 2009. Besides extraordinary foreign central bank monetary stimulus (with the latest shot of adrenaline coming from China) and a fresh wave of mergers and acquisitions, I discuss in my new weekly commentary how low and stable U.S. interest rates are another significant driver of the rally. Income-oriented stocks have appreciated considerably and now appear overvalued as investors continue their reach for income in this low yield environment. Reasons why U.S. rates are so low Despite the two best back-to-back quarters of economic growth since 2003, U.S. long-term yields refuse to budge. Declining inflation expectations are one reason yields are remaining so low, and another reason is yields in other developed countries are even lower. With German and Japanese bond yields well below 1%, a 2.35% yield on a […] Click here to read the original article on ETFdb.com. Related Posts: No Related Posts
A confluence of factors helped U.S. equities rebound more than 12% from their October low, pushing valuations to their highest level since 2009. Besides extraordinary foreign central bank monetary stimulus (with the latest shot of adrenaline coming from China) and a fresh wave of mergers and acquisitions, I discuss in my new weekly commentary how low and stable U.S. interest rates are another significant driver of the rally. Income-oriented stocks have appreciated considerably and now appear overvalued as investors continue their reach for income in this low yield environment. Reasons why U.S. rates are so low Despite the two best back-to-back quarters of economic growth since 2003, U.S. long-term yields refuse to budge. Declining inflation expectations are one reason yields are remaining so low, and another reason is yields in other developed countries are even lower. With German and Japanese bond yields well below 1%, a 2.35% yield on a […]

Click here to read the original article on ETFdb.com.

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