Would US equities beat Treasuries if inflation surged?

The received wisdom is that inflation is worse for government bonds than for equities. Yet the S&P 500 has fared worse than 10-year Treasuries in a couple of periods of high inflation in the US since the 1960s.
John Higgins Chief Markets Economist
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Asset Allocation Update

We doubt US equities will underperform across the board

We forecast that equities in other developed markets (DMs) will outperform US equities over the next couple of years. By contrast, we expect equities in many emerging markets (EMs) to underperform their US peers. That divergence in performance relative to the US would be a break with the typical pattern.

21 January 2022

Asset Allocation Update

Our outlook for fx-hedged returns in 2022

When it comes to developed markets (DMs), we suspect that fx-hedged returns will be significantly better than unhedged returns for US dollar-based investors in foreign-currency-denominated assets.

17 January 2022

Asset Allocation Update

EM equities may continue to underperform in 2022-23

We think that emerging market (EM) equities will continue to underperform their developed market (DM) peers over the next couple of years, even if that underperformance is far less stark than it was in 2021.

13 January 2022

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What’s behind renewed US equity outperformance?

It has become harder to make the case that the stock market in the US will fare worse than those in the rest of the developed world, now that the “rotation” trade has fizzled out. Nonetheless, we still think there are other reasons to expect the relentless outperformance of US equities to end.

7 July 2021

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Consumer confidence and the US stock market

We do not think that the surge in the Conference Board’s index of consumer confidence in June is a reason to be positive about the outlook for the US stock market.

30 June 2021

Asset Allocation Update

Pension portfolio rebalancing not key to low UST yields

Although portfolio rebalancing by US pension funds may have played a role in depressing Treasury yields, it is likely to have been a small one in the grand scheme of things. After all, they own only a small share of the Treasury market and the actions of some other owners have probably had a much bigger influence.

17 June 2021
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