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Revisiting The Stock/Yields Relationship
Despite the positive correlation between stocks and yields existing for nearly five years, many “old pros” are still having a tough time understanding this relationship. For decades the knee-jerk response to lower yields was higher stock prices and vice-versa. While many professionals understand how the stock and yield relationship has operated since 1998, they struggle to understand why this is happening. This may account for the eagerness of the financial press to proclaim a new era in the stock and yield relationship (even though it has lasted over five years)