Momentum Global says S&P 500 equity risk premium over US 10-year Treasuries narrows, boosting bonds’ appeal
TLT•Momentum Global Investment Management said the S&P 500 equity risk premium over 10-year Treasuries has declined, making equities less compelling and strengthening the case for bonds. It cited yields near 6% as a potential catalyst for investors to rebuild bond allocations.
1. Bonds gain appeal
Momentum Global Investment Management flagged a sharp decline in the S&P 500 equity risk premium versus the US 10-year Treasury, warning that equities look less compelling as earnings yields fall below government bond yields. The firm cited yields near 6% as a potential catalyst for investors to rebuild bond allocations, despite recency bias from heavy losses since 2021.
2. Yields and fiscal scrutiny
In the week ended Oct. 9, US Treasury yields reached fresh multi-year highs before easing, supported by stronger auction demand. UK gilt yields jumped during the global sell-off, increasing scrutiny of fiscal credibility ahead of the Autumn Budget.
