OK, stating the obvious quickly, if bond yields rise (on inflation fears, more rate hikes or whatever) your average investor/hedge fund will note that bonds become comparatively more attractive than stocks when weighing up risk/yield.
How high would bond yields need to creep in order to see a mass exodus of funds from investment in stocks (seeking div yield + capital growth) to bonds (seeking less risk + sufficient compensation for money off corporate table)?
This is the game we play every day when trading the markets but I have to admit that I am a bit wary of the fact that I don't know where your typical bank, hedge fund or whatever, would draw the line on putting their chips on risk free vs expected returns. I'm sure it doesn't come down to a pure mathematical equation, as fundamental data would distinguish their outlook on the return posible from stocks, but surely there has to be a rule of thumb where the attractiveness of bonds becomes significantly influential versus an inferior dividend yield from stocks.....
How high would bond yields need to creep in order to see a mass exodus of funds from investment in stocks (seeking div yield + capital growth) to bonds (seeking less risk + sufficient compensation for money off corporate table)?
This is the game we play every day when trading the markets but I have to admit that I am a bit wary of the fact that I don't know where your typical bank, hedge fund or whatever, would draw the line on putting their chips on risk free vs expected returns. I'm sure it doesn't come down to a pure mathematical equation, as fundamental data would distinguish their outlook on the return posible from stocks, but surely there has to be a rule of thumb where the attractiveness of bonds becomes significantly influential versus an inferior dividend yield from stocks.....