Margin of Safety » Stock Prices vs Treasury Yields http://amarginofsafety.com "...to distill the secret of sound investment into three words..." Fri, 26 Jun 2020 18:44:00 +0000 en hourly 1 http://wordpress.org/?v=3.2 Relationship Between Stock Returns and Interest Rate Movements http://amarginofsafety.com/2015/12/05/relationship-between-stock-returns-and-interest-rate-movements/?utm_source=rss&utm_medium=rss&utm_campaign=relationship-between-stock-returns-and-interest-rate-movements http://amarginofsafety.com/2015/12/05/relationship-between-stock-returns-and-interest-rate-movements/#comments Sat, 05 Dec 2015 17:45:55 +0000 Ray Galkowski, CFA http://amarginofsafety.com/?p=2011 Continue reading →]]> I try to find evidence that refutes my theses on expected market returns to avoid behavioral traps. This graph from JP Morgan Asset Management’s research team offers some optimism for equities for rolling two-year periods if the Fed starts to raise while 10-Year Treasury yields are still below 5%. But, the shape of this historical curve is due to conditions that might not exist now. Rates are usually low when the economy has endured a “normal” recession so rising rates indicate a turn toward a more robust economy. Could that be true now?
One major clue can be found in job strength. According to the BLS, “The employment-population ratio (in November) was unchanged at 59.3 percent and has shown little movement since October 2014.”

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