Decent value in bonds
Aug 22, 2023
The last time the gap between the yield of the 10 Year Treasury and the dividend yield of the S&P500 was so high was in 2007! On this measure often used by the Fed and called the Fed model, equities have not been as expensive compared to bonds in more than 15 years. Also there appears to be decent value in US bonds. Question remains what duration to choose. While the yield curve starts indeed to flatten, the short end of the curve remains higher than the longer maturities with the 6 months T-bill at 5.38% and the 2 years Treasury at 5%. At ECP, we have launched this August 2 new UCITS Funds in August investing respectively in USD and EUR short term bonds. On the equity side, we focus on individual companies of good quality with less demanding valuations.