One of the most important relationships in all of finance is the one between bond yields and stock valuations, and it has become increasingly central as investors navigate an environment where interest rates are no longer pinned at historic lows. For more than a decade, near-zero interest rates distorted the relationship between bonds and stocks, making stocks almost always preferable to bonds and inflating the valuations of long-duration growth assets. As rates have normalized, the relationship has reasserted itself, and the competition between fixed income and equities has become one of the most important forces driving market movements. Understanding how…
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