Bond yield 5.3% and effective yield is 2.3% while S&P500 had 24% and 10.5% returns in 2023 and YTD, respectively. 12x of bonds return, Why “bonds are attractive”? “The central bank still has 50% or 20% chance to increase rate”… that’s quite a big jump in probabilities, from less likely to coin flip. These don’t seem to be logical, right?
How does it work this
Bond yield 5.3% and effective yield is 2.3% while S&P500 had 24% and 10.5% returns in 2023 and YTD, respectively. 12x of bonds return, Why “bonds are attractive”? “The central bank still has 50% or 20% chance to increase rate”… that’s quite a big jump in probabilities, from less likely to coin flip. These don’t seem to be logical, right?
Risk. Think about risk.