SPY•Europe Capital Partners said equity returns have historically been lower during rising bond yields than during declining yields, based on an analysis of 155 years of US data. It cautioned that the study alone does not forecast lower future returns.
Europe Capital Partners’ October 22 analysis said equity returns were historically lower during rising bond yields than during declining yields. The analysis drew on André Huwiler’s study, which divides 155 years of US data into five interest-rate regimes, and cautioned against using it alone to forecast lower returns. It said higher interest rates increase the importance of valuations, particularly when expectations are high, potentially favoring disciplined value investors.
