Where is the yield ?
Jun 19, 2023
3 month US Treasuries are now as attractive as US equities and investment grade bonds as all three asset classes currently produce an equivalent yield. Such a situation is unseen, at least since the great financial crisis. In other words, there is no remuneration for the additional risk investors take by investing in bonds ( duration risk, credit risk ) or in equities ( being the last ones in the chain to get their money back in case of a default ). For us at ECP, there are 2 conclusions : 1/ it makes sense to consider Treasuries in an asset allocation and 2/ it equally makes sense to be selective in choosing the equities and bonds with the highest yields and the lowest risks.