Negative Rates in the US Unlikely: How Money Market Funds Weather the Possibility

Total Page:16

File Type:pdf, Size:1020Kb

Negative Rates in the US Unlikely: How Money Market Funds Weather the Possibility FOR PROFESSIONAL CLIENTS AND, IN SWITZERLAND, FOR QUALIFIED INVESTORS ONLY. Negative rates in the US unlikely: how Money Market Funds weather the possibility Can Money Market Funds Weather When a central bank considers lowering interest rates below zero, Negative Rates? the goal is to incentivize banks to lend money to influence spending From 2009–2015, money market by businesses and consumers to spur economic growth. The impact funds operated in a zero or near of the COVID-19 pandemic and its effect on the economy has many zero interest rate environment. now inquiring as to whether the US may be headed into a period While we believe it is unlikely that policy makers will seek to lower of negative interest rates as the Fed Funds target rate is effectively interest rates into negative territory, between 0–.25%. To this question, we believe the answer is that it is only prudent as business currently such a move by the Federal Reserve is unlikely for leaders to be prepared and contemplate various tools that may several reasons: be implemented in such a scenario. The Fed’s recent rate cut to 0-0.25%, with the introduction of a wide range These tools are: 1 of unconventional policy measures, can imply that policy makers view Fee Waivers: Should a low yield or negative rates as a last resort measure. A case in point is the central negative interest rate occur over bank’s willingness in March 2020 to swiftly implement/reintroduce a prolonged timeframe (where a stimulus programs to counterattack the anticipated economic impact of fund’s gross yield is insufficient the COVID-19 pandemic. to cover fund expenses and/or generate a positive yield), a fund There was unanimity in the October 2019 Federal Open Market Committee may implement temporary, partial 2 (FOMC) meeting minutes that “all participants felt that negative interest fee waivers to generate a positive rates currently did not appear to be an attractive monetary policy tool in or zero yield in an effort to keep the United States.” The same conclusion was repeated in February/March the fund’s net asset value at 2020 by Chairman Powell as well as a number of other FOMC Members $1.00 per share. including Mester, Kaplan, and Kashkari. Floating NAV: Reflect the fund’s The US Treasury will need to finance the new stimulus programs through negative interest earnings in the 3 the significantly increased issuance of Treasury securities. The share price by converting the fund’s unprecedented amount of new Treasury borrowing makes negative rates constant net asset value (NAV) of very unlikely, barring a major monetary policy shift from the $1.00 per share to a floating NAV Federal Reserve. per share, as calculated out to 4 decimal places.1 In some cases, a fund’s trading deadline may need to be modified to earlier in the trading day to support the processing of same-day shareholder activity. 1 Money market mutual funds may be classified as retail, government or institutional. Retail and government funds are permitted to maintain a constant NAV, while institutional funds generally must maintain a floating NAV. Reverse Distribution Mechanism (RDM; also known as Share The evidence of the stimulative effect of negative interest rates to an Cancellation): To keep a fund’s NAV 4 economy is mixed. Experience with negative policy rates in Japan and at a constant $1.00 per share, a Europe does not provide conclusive evidence that negative policy rates fund’s negative dividend rate could restore confidence and economic activity. In fact, negative rates in Europe potentially be passed to investors have reduced credit creation in the real economy which has impacted by reducing the equivalent number liquidity in short-term funding markets as well as longer duration fixed of shares held by each shareholder income securities. on a daily basis. Negative rates may bring forth a false sense of the cost of credit which When money market funds 5 could lead to a loosening of financial conditions, thereby creating distribute dividends, they are often unintended consequences such as market bubbles, excessive inflation, or reinvested to purchase new fund exacerbating currency wars. shares. Under RDM, the process is reversed on days that the fund yield is negative, meaning shares 2 are cancelled instead of purchased. Dreyfus CIS continue to believe that a negative short-term interest rate policy is There is no formal regulatory unlikely from the Fed. At the same time, we do believe that groundwork on systems, guidance on whether or how RDM regulatory and logistical issues should continue as a matter of prudent planning. In may be used for negative dividends. the unlikely case of negative rates, as we have seen in Europe, we believe the money However, RDM or share cancellation fund industry can adapt and continue to provide the shareholder benefits of market- was previously utilised by European rate returns, daily liquidity and ease of trading. money funds prior to 2019. Reverse Stock Split: The number of fund shares held by shareholders would be reduced while their value would be proportionately increased in an effort to maintain a constant NAV share price. While a reverse stock split is a tool that is generally available for registered investment companies, this option has not been deployed by money market mutual funds in recent history. Funds considering the use of reverse stock splits would need to confirm that this approach is feasible from both operational and regulatory perspectives. 2 Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA), BNY Mellon Fund Management (Luxembourg) S.A. (BNY MFML) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA, BNY MFML or the BNY Mellon funds. IMPORTANT INFORAMATION For Professional Clients and, in Switzerland, for Qualified Investors only. Any views and opinions are those of the investment manager, unless otherwise noted and is not investment advice. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and its subsidiaries. Dreyfus Cash Investment Strategies is a division of BNY Mellon Investment Adviser, Inc. Issued in the UK by BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised and regulated by the Financial Conduct Authority. Issued in Switzerland by BNY Mellon Investments Switzerland GmbH, Talacker 29, CH-8001 Zürich, Switzerland. Authorised and regulated by the FINMA. Issued in Europe (ex-Switzerland) by BNY Mellon Fund Management (Luxembourg) S.A. (BNY MFML), a public limited company (société anonyme) incorporated and existing under Luxembourg law under registration number B28166 and having its registered address at 2-4 Rue Eugène Ruppert L-2453 Luxembourg. BNY MFML is regulated by the Commission de Surveillance du Secteur Financier (CSSF). MAR001395 Exp: 17 August 2020 T8990 07/20.
Recommended publications
  • Spdr Bloomberg Barclays High Yield Bond Etf – Reverse Split Option Symbol: Jnk New Symbol: Jnk1 Date: 05/06/19
    #44979 DATE: MAY 1, 2019 SUBJECT: SPDR BLOOMBERG BARCLAYS HIGH YIELD BOND ETF – REVERSE SPLIT OPTION SYMBOL: JNK NEW SYMBOL: JNK1 DATE: 05/06/19 SPDR Bloomberg Barclays High Yield Bond ETF (JNK) has announced a 1-for-3 reverse stock split. As a result of the reverse stock split, each JNK ETF will be converted into the right to receive approximately 0.333333 (New) SPDR Bloomberg Barclays High Yield Bond ETF. The reverse stock split will become effective before the market open on May 6, 2019. CONTRACT ADJUSTMENT Effective Date: May 6, 2019 Option Symbol: JNK changes to JNK1 Contract Multiplier: 1 Strike Divisor: 1 New Multiplier: 100 (e.g., for premium or strike dollar extensions 1.00 will equal $100) New Deliverable Per Contract: 1) 33 (New) SPDR Bloomberg Barclays High Yield Bond ETF (JNK) 2) Cash in lieu of approximately 0.3333 fractional JNK ETF, if any CUSIP: JNK (New): 78468R622 PRICING Until the cash in lieu amount, if any, is determined, the underlying price for JNK1 will be determined as follows: JNK1 = 0.333333 (JNK) DELAYED SETTLEMENT The JNK component of the JNK1 deliverable will settle through National Securities Clearing Corporation (NSCC). OCC will delay settlement of the cash portion of the JNK1 deliverable until the cash in lieu of fractional JNK ETFs, if any, is determined. Upon determination of the cash in lieu amount, OCC will require Put exercisers and Call assignees to deliver the appropriate cash amount, if any. DISCLAIMER This Information Memo provides an unofficial summary of the terms of corporate events affecting listed options or futures prepared for the convenience of market participants.
    [Show full text]
  • BIS Working Papers No 532 Mortgage Risk and the Yield Curve
    BIS Working Papers No 532 Mortgage risk and the yield curve by Aytek Malkhozov, Philippe Mueller, Andrea Vedolin and Gyuri Venter Monetary and Economic Department December 2015 JEL classification: G12, G21, E43 Keywords: Term Structure of Interest Rates, MBS, Supply Factor BIS Working Papers are written by members of the Monetary and Economic Department of the Bank for International Settlements, and from time to time by other economists, and are published by the Bank. The papers are on subjects of topical interest and are technical in character. The views expressed in them are those of their authors and not necessarily the views of the BIS. This publication is available on the BIS website (www.bis.org). © Bank for International Settlements 2015. All rights reserved. Brief excerpts may be reproduced or translated provided the source is stated. ISSN 1020-0959 (print) ISSN 1682-7678 (online) Mortgage Risk and the Yield Curve∗ Aytek Malkhozov† Philippe Mueller‡ Andrea Vedolin§ Gyuri Venter¶ Abstract We study the feedback from the risk of outstanding mortgage-backed secu- rities (MBS) on the level and volatility of interest rates. We incorporate the supply shocks resulting from changes in MBS duration into a parsimonious equilibrium dynamic term structure model and derive three predictions that are strongly supported in the data: (i) MBS duration positively predicts nominal and real excess bond returns, especially for longer maturities; (ii) the predictive power of MBS duration is transitory in nature; and (iii) MBS convexity increases interest
    [Show full text]
  • Bond Liquidity and Dealer Inventories: Insights from US and European Regulatory Data
    52 Financial Conduct Authority Occasional Paper Securities and Exchange Commission DERA Working Paper February 2020 Bond liquidity and dealer inventories: Insights from US and European regulatory data Plamen Ivanov, Alexei Orlov and Michael Schihl Occasional Paper 52 / DERA Working Paper Bond liquidity and dealer inventories Occasional Paper 52 / DERA Working Paper Abstract Most corporate bond research on liquidity and dealer inventories is based on the USD- denominated bonds transactions in the US reported to TRACE. Some of these bonds, however, are also traded in Europe, and those trades are not subject to the TRACE reporting require- ments. Leveraging our access to both TRACE and ZEN, the UK's trade reporting system which is not publicly available, we find an overlap of about 30,000 bonds that are traded both in the US and in Europe. This paper examines how using the CUSIP-level information from TRACE and ZEN affects the computation of bond liquidity metrics, dealer inventories, and the relationship between the two. We find that in the combined dataset, the weekly volume traded and number of trades are significantly higher than in TRACE: e.g., the average unconditional number of trades in investment-grade (high-yield) bonds is 17% (20%) higher and the average uncondi- tional volume traded is 15% (17%) higher when we incorporate the information from ZEN. We find a strong positive relationship between inventories and liquidity, as proxied by the trading activity metrics (i.e., number of trades, zero trading days, or par value traded) in TRACE data, and this result carries over to the combined dataset.
    [Show full text]
  • Foundations of High-Yield Analysis
    Research Foundation Briefs FOUNDATIONS OF HIGH-YIELD ANALYSIS Martin Fridson, CFA, Editor In partnership with CFA Society New York FOUNDATIONS OF HIGH-YIELD ANALYSIS Martin Fridson, CFA, Editor Statement of Purpose The CFA Institute Research Foundation is a not- for-profit organization established to promote the development and dissemination of relevant research for investment practitioners worldwide. Neither the Research Foundation, CFA Institute, nor the publication’s editorial staff is responsible for facts and opinions presented in this publication. This publication reflects the views of the author(s) and does not represent the official views of the CFA Institute Research Foundation. The CFA Institute Research Foundation and the Research Foundation logo are trademarks owned by The CFA Institute Research Foundation. CFA®, Chartered Financial Analyst®, AIMR- PPS®, and GIPS® are just a few of the trademarks owned by CFA Institute. To view a list of CFA Institute trademarks and the Guide for the Use of CFA Institute Marks, please visit our website at www.cfainstitute.org. © 2018 The CFA Institute Research Foundation. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the copyright holder. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought.
    [Show full text]
  • What Are High-Yield Corporate Bonds?
    INVESTOR BULLETIN What Are High-yield Corporate Bonds? The SEC’s Office of Investor Education and Advocacy is a high-yield bond, it is important that you understand issuing this Investor Bulletin to educate individual investors the risks involved. about high-yield corporate bonds, also called “junk bonds.” While they generally offer a higher yield than investment-grade Default risk. Also referred to as credit risk, this is the bonds, high-yield bonds also carry a higher risk of default. risk that a company will fail to make timely interest or principal payments and default on its bond. Defaults also What is a high-yield corporate bond? can occur if the company fails to meet certain terms of its A high-yield corporate bond is a type of corporate bond debt agreement. Because high-yield bonds are typically that offers a higher rate of interest because of its higher issued by companies with higher risks of default, this risk risk of default. When companies with a greater estimated is particularly important to consider when investing in default risk issue bonds, they may be unable to obtain high-yield bonds. an investment-grade bond credit rating. As a result, they Interest rate risk. typically issue bonds with higher interest rates in order to Market interest rates have a major entice investors and compensate them for this higher risk. impact on bond investments. The price of a bond moves in the opposite direction than market interest rates—like High-yield bond issuers may be companies characterized opposing ends of a seesaw. This presents investors with as highly leveraged or those experiencing financial interest rate risk, which is common to all bonds.
    [Show full text]
  • Accessing the U.S. Capital Markets
    ACCESSING THE U.S. CAPITAL MARKETS SECURITIES PRODUCTS An Introduction to United States Securities Laws This and other volumes of Accessing the U.S. Capital Markets have been prepared by Sidley Austin LLP for informational purposes only, and neither this volume nor any other volume constitutes legal advice. The information contained in this and other volumes is not intended to create, and receipt of this or any other volume does not constitute, a lawyer-client relationship. Readers should not act upon information in this or any other volume without seeking advice from professional advisers. Sidley Austin LLP, a Delaware limited liability partnership which operates at the firm’s offices other than Chicago, London, Hong Kong, Singapore and Sydney, is affiliated with other partnerships, including Sidley Austin LLP, an Illinois limited liability partnership (Chicago); Sidley Austin LLP, a separate Delaware limited liability partnership (London); Sidley Austin LLP, a separate Delaware limited liability partnership (Singapore); Sidley Austin, a New York general partnership (Hong Kong); Sidley Austin, a Delaware general partnership of registered foreign lawyers restricted to practicing foreign law (Sydney); and Sidley Austin Nishikawa Foreign Law Joint Enterprise (Tokyo). The affiliated partnerships are referred to herein collectively as “Sidley Austin LLP,” “Sidley Austin” or “Sidley.” This volume is available electronically at www.accessingsidley.com. If you would like additional printed copies of this volume, please contact one of our lawyers or our Marketing Department at 212-839-5300, e-mail: [email protected]. For further information regarding Sidley Austin, you may access our web site at www.sidley.com Our web site contains address, phone and e-mail information for our offices and attorneys.
    [Show full text]
  • Speculation Powers Recent Rallies by Corporate Bonds Moody's Analytics/New York: » FULL STORY PAGE 2
    CAPITAL MARKETS RESEARCH APRIL 16, 2020 Speculation Powers Recent Rallies by Corporate WEEKLY MARKET OUTLOOK Bonds Moody’s Analytics Research Credit Markets Review and Outlook by John Lonski Weekly Market Outlook Contributors: Speculation Powers Recent Rallies by Corporate Bonds Moody's Analytics/New York: » FULL STORY PAGE 2 John Lonski The Week Ahead Chief Economist We preview economic reports and forecasts from the US, UK/Europe, and Asia/Pacific regions. 1.212.553.7144 » [email protected] FULL STORY PAGE 6 Yukyung Choi Quantitative Research The Long View Investment Grade: We see the year-end 2020’s average Credit investment grade bond spread under its recent 183 basis Moody's Analytics/Asia-Pacific: Full updated stories and Spreads points. High Yield: Compared with a recent 814 bp, the high- yield spread may approximate 650 bp by year-end 2020. Katrina Ell key credit market metrics: Defaults US HY default rate: According to Moody's Investors Service, Economist April’s ample issuance of the U.S.' trailing 12-month high-yield default rate jumped up corporate bonds defies from March 2019’s 2.7% to February 2020’s 4.7% and may Moody's Analytics/Europe: business activity’s deep average 12.7% during 2020’s final quarter. Issuance For 2019’s offerings of US$-denominated corporate bonds, Barbara Teixeira Araujo and widespread IG bond issuance rose by 2.6% to $1.309 trillion, while high- Economist contraction. yield bond issuance surged by 55.8% to $432 billion. In 2020, US$-denominated corporate bond issuance is Moody’s Analytics/U.S.: expected to grow by 18.4% for IG to $1.551 trillion, while high-yield supply may sink by 20.7% to $343 billion.
    [Show full text]
  • Municipal Securities Broker's Brokers
    THE ROLE OF Municipal Securities Broker’s Brokers IN THE MUNICIPAL MARKETS [this page intentionally left blank] THE ROLE OF Municipal Securities Broker’s Brokers IN THE MUNICIPAL MARKETS INTRODUCTION Municipal securities are debt obligations issued Number of Municipal Issuers vs. Corporates by cities, counties, states, and other non-federal governmental entities, which use the proceeds to build schools, highways, hospitals, sewer systems and Corporate many other projects for the public good. There are Issuers approximately 55,000 issuers of municipal securities 9% nationwide, ranging from small school districts and fire Municipal districts to U. S. territories and all 50 states, which have Issuers 91% more than 950,000 individual securities outstanding represented by CUSIP numbers.1 This compares to the public corporate securities market which has approximately 5,500 issuers,2 who have approximately 5,500 58,000 individual securities outstanding represented by CUSIP numbers.3 As of December 31, 2013, there were Source: CUSIP Bureau, Thomson Reuters Thomson CUSIP Bureau, Source: about $3.7 trillion of municipal bonds outstanding,4 (approximately $334.9 billion issued in 2013),5 which accounts for approximately 9.2% of the total outstanding debt in the U.S. market. As a comparison Trades by Sector, 2013 there are 872 U.S. Treasury securities represented by CUSIP numbers, representing $11.9 trillion in outstanding bonds.6 Other Education Once these bonds are issued, investors buy and sell 23% 23% municipal securities in what is referred to as the “secondary market.” These investors can be individuals, Various 9% 10% Health institutional investors as well as broker-dealers acting Purpose 2% on behalf of their customers or trading for their own Housing account.
    [Show full text]
  • The Fundamental Principles of Financial Regulation
    Geneva11_latest.qxp 07/05/2009 16:48 Page i The Fundamental Principles of Financial Regulation Geneva Reports on the World Economy 11 Geneva11_latest.qxp 07/05/2009 16:48 Page ii International Center for Monetary and Banking Studies (ICMB) International Center for Monetary and Banking Studies 11 A Avenue de la Paix 1202 Geneva Switzerland Tel (41 22) 734 9548 Fax (41 22) 733 3853 Website: www.icmb.ch © June 2009 International Center for Monetar y and Banking Studies Centre for Economic Policy Research (CEPR) Centre for Economic Policy Research 53-56 Great Sutton Street London EC1V 0DG UK Tel: +44 (0)20 7183 8801 Fax: +44 (0)20 7183 8820 Email: [email protected] Website: www.cepr.org British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Librar y ISBN: 978-0-9557009-7-2 Geneva11_latest.qxp 07/05/2009 16:48 Page iii The Fundamental Principles of Financial Regulation Geneva Reports on the World Economy 11 Markus Brunnermeier Princeton University and CEPR Andrew Crocket JPMorgan Chase Charles Goodhart London School of Economics Avinash D. Persaud Chairman. Intelligence Capital Limited Hyun Shin Princeton University and CEPR ICMB INTERNATIONAL CENTER FOR MONETARY AND BANKING STUDIES CIMB CENTRE INTERNATIONAL D’ETUDES MONETAIRES ET BANCAIRES Geneva11_latest.qxp 07/05/2009 16:48 Page iv International Center for Monetary and Banking Studies (ICMB) The International Center for Monetary and Banking Studies was created in 1973 as an inde- pendent, non-profit foundation. It is associated with Geneva s Graduate Institute of International Studies. Its aim is to foster exchange of views between the financial sector, cen- tral banks and academics on issues of common interest.
    [Show full text]
  • Bloomberg Short-Term Bank Yield Index 2
    A Bloomberg Professional Services Offering Services Professional Bloomberg Bloomberg Short-Term Bank Yield Index BISL BSBY report: Additional analysis and key facts July 1, 2021 Bloomberg Short-Term Bank Yield Index 2 Contents 3 Executive summary 3 Background 4 Why BSBY? 5 Bank ALM and the need for credit-sensitive term rates 7 BSBY vs. LIBOR: Key differences 8 Fundamentals of money markets in the U.S. 9 How money market issuance and trading occur 10 Robust volumes in times of market stress 11 Mitigating the risk of manipulation 13 Potential impact of money market reform on CP/CD volumes 14 Economic outlook and ramifications for the money markets 15 Conclusion Bloomberg Short-Term Bank Yield Index 3 Executive summary In particular, this paper addresses the following Bloomberg is proud to support the efforts of the public key points: sector and market participants to facilitate the orderly • Market participants and the public sector have transition from the London Inter-bank Offered Rate (LIBOR) declared the need, and support, for CSRs, and other inter-bank offered rates (IBORs) to risk-free rates primarily for the lending market (RFRs), including the provision of a robust and transparent credit-sensitive rate (CSR). • CSRs are accepted and used in many markets around the world, alongside RFRs The aim of this paper is to further inform public-sector and industry-level discussion around how CSRs—including • BSBY is fundamentally and structurally different BSBY—can facilitate benchmark transition. from LIBOR • Testing has demonstrated BSBY’s
    [Show full text]
  • “Dividend Yield Investment Strategies in the Taiwan Stock Market”
    “Dividend yield investment strategies in the Taiwan stock market” Chun-Fan You AUTHORS Szu-Hsien Lin Hsiao-Fen Hsiao Chun-Fan You, Szu-Hsien Lin and Hsiao-Fen Hsiao (2010). Dividend yield ARTICLE INFO investment strategies in the Taiwan stock market. Investment Management and Financial Innovations, 7(2-1) RELEASED ON Friday, 11 June 2010 JOURNAL "Investment Management and Financial Innovations" FOUNDER LLC “Consulting Publishing Company “Business Perspectives” NUMBER OF REFERENCES NUMBER OF FIGURES NUMBER OF TABLES 0 0 0 © The author(s) 2021. This publication is an open access article. businessperspectives.org Investment Management and Financial Innovations, Volume 7, Issue 2, 2010 Chun-Fan You (Taiwan), Szu-Hsien Lin (Taiwan), Hsiao-Fen Hsiao (Taiwan) Dividend yield investment strategies in the Taiwan stock market Abstract This study examines the feasibility of investment strategies based on dividend yields in the current stock dividend market. The data gathered from Taiwan listed companies from 2003 to 2007 shows that the performance of pure cash dividend yield portfolio investment during the second year proved significantly superior to those of market indices and a series of dividend yield portfolio. This result has two implications. First, the dividend yield ranking conveys a future profitability signal in the Taiwan market. Second, the behavior of investors manifests a sense of underreaction whereby response to the real value of the listed companies is gradually produced a few months after dividends have been de- clared. Finally, the empirical results are robust to the factors, such as: the 2008 financial storm, other definitions of dividend yield, various numbers of constituent firms, changes in portfolio weights, and consideration of transaction costs, etc.
    [Show full text]
  • Dividends: NIPA Vs. S&P
    Corporate Finance Briefing: NIPA vs. S&P 500 Dividends Yardeni Research, Inc. October 1, 2021 Dr. Edward Yardeni 516-972-7683 [email protected] Joe Abbott 732-497-5306 [email protected] Mali Quintana 480-664-1333 [email protected] Please visit our sites at www.yardeni.com blog.yardeni.com thinking outside the box Dividends Figure 1. 1600 1600 DIVIDENDS IN CORPORATE PROFITS (billion dollars, 4-quarter sum) 1400 Q2 1400 1200 Dividends 1200 All Corporations (1384.2) Nonfinancial Corporations (815.2) 1000 S&P 500 (501.2) 1000 800 Q2 800 600 600 Q3 400 400 200 200 yardeni.com 0 0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Source: Federal Reserve Board, Financial Accounts of the United States, Standard & Poor’s and Bureau of Economic Analysis. Figure 2. 75 75 S&P 500 DIVIDEND YIELD 70 70 (trailing 4-quarter sum) Q3 65 65 60 60 Invested in 1970 (68.7) 55 Invested in 1980 (43.7) 55 Invested in 1990 (17.9) 50 50 Invested in 2000 (4.5) 45 Invested in 2010 (4.7) 45 40 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 yardeni.com 0 0 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26 Source: Standard & Poor’s Corporation.
    [Show full text]