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Brian Chappatta

The Bond Market’s Bullish Case for Stocks Is Getting Weak

Yields are at levels that rival dividends on equities, complicating the income equation for investors.

The math is more complicated.

The math is more complicated.

Photographer: Gilles Sabri/Bloomberg

For the better part of the past 10 months, investors have justified the huge melt-up in equity prices in the face of economic and societal hardship from the Covid-19 pandemic with three simple words: “But bond yields.”

I know this in part because I made that exact argument in early September in a column that ended up coinciding with an all-time high for the S&P 500 Index that would last for more than two months. It showed that the dividend yield on the S&P 500 and even the Nasdaq 100 were reliably above the benchmark 10-year Treasury yield, indicating that equities still had plenty of relative value when compared with the world’s largest bond market.