Bond Yields Relatively Attractive, but Does it Matter?
The S&P 500 Index dividend yield is currently at 1.67%, while the US 2-year treasury yield is at 4.18%. This marks the largest spread between the two yields since the period from November 15, 2005, to August 13, 2007.
When bond yields are higher than stock yields, it suggests that investors are favoring safer investments over riskier ones, indicating a possible economic slowdown or recession.
However, it is important to note that in the previous period where the spread was this wide, the S&P 500 Index still performed well, with a 21.6% increase over an almost 2-year timeframe.