Archive for April, 2015

15
Apr

Extraordinary Government Bond rally

Extraordinary Government Bond rally

The quandary for market observers is whether the market is cheap or expensive given the recent rally in markets. Each argument has some validity. Price earnings ratios for many stocks are well above the average of the last two decades. Conversely, equity earnings yields continue to look attractive when compared to falling long term interest rates. Global interest rates are now at unprecedented levels; for instance German 10 year government bond yields have fallen dramatically over the last five years.