Chart of the Day: 3-Month Treasury Yield Surpasses S&P 500 Yield

For the first time in a decade, the yield on three-month treasuries exceeds that of S&P 500 dividends.

The above chart is from the Financial Times article Authers’ Note: Hunting for yields is getting easier.

John Authers also notes the "Dividend Aristocrats" of the S&P 500 — the stocks with the highest and most reliable dividend yields — are finding that they now have competition from 2-year Treasury bonds.

Authers makes a number of interesting points.

  1. The Beige Book features far more references to inflation than it did when inflation was last persistently above the Fed's target.
  2. The intensity of references to inflation on the Google search engine is moving up.
  3. Net share buybacks have been negligible. It looks like the bulk of last quarter’s repurchases went on stock options.

It's increasingly easy to stick with my prognosis: Inflation is in the Rear-View Mirror.

The Nearly Unanimous Opinion: Inflation Has Arrived, reinforced today, adds to my conviction.

Mike "Mish" Shedlcok

Comments (13)
No. 1-13
Realist
Realist

Sometimes, the consensus is correct, and being contrarian, is incorrect. It would not surprise me to see both inflation and interest rates continue upward throughout 2018.

Bam_Man
Bam_Man

In a world completely saturated with $USD denominated debt, it will not take much longer for interest rates, even at current levels, to do an enormous amount of economic/financial damage.

Bam_Man
Bam_Man

Anyone who thinks that interest rates are headed any more than slightly higher from here (before collapsing back to near ZERO) is going to find themselves
sorely mistaken.

GiT
GiT

Europe is not challenging the US. It isn't only a matter of trade, there are also other aspects such as technology transfers. Since the very beginning of human history, technological dominance has always been related to military supremacy and security. China has been the biggest economy of the world before the industrial revolution and now is slowly rising back to challenge the dominance of the West. Now think of what would it mean China, still a state-driven socialist economy. getting the lead in AI, self-driving military vehicles and so on.