The Search for Yield: The U.S. Dollar weakens, will U.S. stocks Rise or Fall?

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Recent dollar weakness has halted the stock market’s huge bull run; which was driven largely by yield-chasing investors pouring money into dividend-paying stocks.  Has the great migration of capital to the U.S. ended? Will the dollar weaken, as a result? With zero interest rates from the FED,  and treasuries paying next-to-nothing, investors sought return by buying investments in dividend paying stocks, driving the DOW and S&P 500 to record levels.  Has the party ended?

Well, not yet.  The FED’s recent dovish tone (meaning they’re not likely to raise rates quickly) has prompted stock markets to remain bullish and treasury yields to remain abysmal.

The overseas markets aren’t fairing much better.   Japan has zero interest rates while Euro bond yields are paying paltry returns.  Both the Bank of Japan and the European Central Bank’s easy monetary policies are likely to continue into next year and this might be just enough to keep the party going; at least for a little while.



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