Treasury yield has surpassed the S&P 500 dividend yield | KPMG | NL

First time since financial crisis: 2yr U.S. Treasury yield has surpassed the S&P 500 dividend yield

First time since financial crisis: ...

The ‘Yield gap’ is the gap between the S&P 500 dividend yield and the 2yr U.S. Treasury bond. Both yields are short-term where the gap indicates the difference in yields between ‘risk-free’ and risky assets. Based on the risk-return tradeoff one would expect higher dividend yields, in comparison to the government bonds yields, to offset the risk associated with stocks.

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For the past decennia, investors have flocked to the stock market to seek higher yields, as government bonds reached historical low returns. Now, as treasury yields exceed the S&P 500 dividend yield, there is concern that investors will switch from stocks to bonds, wielding in a bearish period on the stock market.

More information? Please contact Jeroen Weimer.
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