Bonds interest rates have traditionally correlated negatively to stocks over longer periods of time. One logic is that both investments compete for investors based on a yield (returns) standpoint relative to risk. When interest rates move higher, stock investments need to be more attractive on a returns basis and, in the current case, vice versa. Looking at the world through this past performance lens in the historical oddity of negative interest rates, Societe Generale’s monthly Risk Premium report notes that stocks might not be as overvalued on this correlation basis. Considering forward looking events, however, might yield a different picture, which…
Soc Gen Warns Of Double Digit Correction As Bond Yields Creep Lower
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.