May 19, 2021
Writing for Firstlinks, Munro Partners CIO Nick Griffin takes the reader on a journey into an Area of Interest – the emerging consumer.
Global equity markets had a volatile start to 2021 as US long-term interest rates, represented by the nominal yield on the benchmark 10-year Treasury, rose on the back of expectations of a vaccine-led recovery.
This has compressed the equity risk premium – the premium that equities offer investors over interest rates – and made markets look less attractive. It has made longer duration equities, like growth equities, look even less attractive still. The chart below shows the contraction in spreads between the US S&P 500 earnings yield minus the benchmark US bond.