- Real yields on 10 year US treasury fell to -1.1 per cent in July
- More volatility possible and some analysts favour defensive shares
Calculations in research by the Bank of America says world interest rates are at a 5,000-year low. How those estimates are made back to the times of the early pharaohs is remarkable but BoA’s assertion that rates will struggle to rise from here is made with more reliable recent data points.
The dilemma for all investors, whether or not they like to hold government bonds, is should they position their portfolios for a market that demands higher yields and therefore a bigger discount rate for holding riskier assets like shares. When that happens, share prices must re-rate, a dynamic in evidence at the start of 2021 which contributed hugely to the rotation into value stocks.