The financial attractiveness of US stocks has fallen to a multi-year low. The equity risk premium for 10-year bonds is now 1.59 percentage points, lower than it was in 2007 before the global financial crisis.

The financial attractiveness of US stocks has fallen to the level of 2007

US bond yields have risen while the attractiveness of stocks has waned and is currently at its lowest level since October 2007. The Wall Street Journal reports this, citing a study by international investment company BlackRock .

The equity risk premium on 10-year US bonds is 1.59 percentage points, lower than in 2007 prior to the international financial crisis.

Since 2008, the risk premium has averaged 3.5 percentage points. BlackRock estimates that the average equity risk premium calculated since 1957 is 1.62 percentage points.

In 2007, US stocks rose to all-time highs, while bond yields approached the current level of 4.8%. In 2008, the index, which tracks the dynamics of the 500 largest US companies, collapsed by almost half, the newspaper notes.


Kirill Bilyk

Source: RB

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