The traditional relationship of bonds and equities appears to be skewed as both dance cheek to cheek.
Bond yields have fallen to record lows (prices rise) and equities in the US (the S&P 500 on a total return basis) have risen to a record high.
Central banks have been buyers of bonds which has helped boost prices and force yields lower whilst equities have lived off the fumes of such stimulus but are proving attractive from a dividend perspective.
At some point, something will have to give and there could be real danger on both sides of a bubble bursting. As long as there appears to be lower, slower growth, then equities are more likely to suffer in the near term but a quest for income via dividends is supporting valuations as interest rates around the world tumble towards zero and beyond.
