Negative Real Returns On Bonds Changes The Asset Valuation Paradigm

Published Wednesday, September 22, 2021 at: 11:38 AM EDT

There’s a new paradigm in valuing stocks and bonds. The change in the relative value of stocks versus bonds – the two primary investments in a diversified portfolio -- has major implications for strategic retirement investors. Here’s what’s happening.

The bond market expects inflation for the next decade to annually average 2.35%, according to a market-based measure of expected inflation known as the Breakeven Inflation Rate. The BIR is derived from subtracting the current yield on 10-Year Treasury Inflation Protected Securities from the current yield on a 10-year Treasury bond.

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This article was written by a professional financial journalist for Materetsky Financial Group, Inc. and is not intended as legal or investment advice.

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