What to expect from stocks and bonds over the next two decades

First, for the numbers: Over the past 123 years, global equities have returned an annual return, adjusted for inflation, of 5%; This is better than the 1.7% real yield for bonds, and the 0.4% yield for Treasury bills. Australia has been the best country for inflation-adjusted annual stock market returns in US dollars since 1900, with a return of 6.43%, although the US is behind at 6.38%. Stocks outperformed bonds, bills and inflation in all 35 countries for which the researchers have 123 years of data.

On today’s topic, they said that once inflation exceeds 8%, it takes several years to return to the target, Citing recent research. Equities do not provide a hedge against inflation, as they concluded and as the 2022 returns showed. Historically, returns on stocks and bonds have been much lower during hiking cycles than easing cycles.

The researchers also studied commodities: commodities had a low correlation with stocks and a negative correlation with bonds, providing a hedge against inflation, but they noted that the size of the investable market was very small, making significant over-allocation difficult.

Going forward – they estimate that the equity risk premium on bills of exchange will be around 3.5%, which is lower than the historical figure of 4.6%. But that still means that equity investors should double their money for short-term government bonds within 20 years. They noted that when considering future returns, real returns tend to be better in times of high interest rates than in times of low, citing 2,487 years of data from the countries.

They predict that for Gen Z they will see roughly the same return in stocks as Millennials, but much worse bond returns. “We just got lucky,” Marsh told a journalist on a phone call. “I don’t think we’ll ever go back to that.”

market

US stock futures

ES00

NQ00

They were signaling a stronger start. The yield on the 10-year Treasury note

TMUBMUSD10Y

increased by as much as 3.96%.

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uproar

The latest reading of weekly jobless claims was still as low as 192,000, which was lower than economists’ expectations. Fourth quarter GDP was revised to show growth of 2.7% from 2.9%. Atlanta Fed President Raphael Bostic and San Francisco Fed President Mary Daley are scheduled to make remarks. Treasury Secretary Janet Yellen, who is in India for a meeting of G20 finance ministers, said the global economy is in better shape than it was just a few months ago.

nvidia

NVDA

Shares rose in pre-market activity as the graphics chip maker projected first-quarter revenue above Wall Street expectations and laid out how it aims to capitalize on opportunities in artificial intelligence.

Unit programs

Yu

Shares fell after the game engine company forecast revenue below estimates.

Alibaba shares

Baba

It soared as the Chinese internet giant’s fiscal third-quarter earnings exceeded fourth-quarter earnings expectations.

etsy

ETSY

Shares rose on better-than-expected revenue from the arts e-commerce site, though sales for the current quarter are expected to be in line with estimates. ebay

ebay

Involved. However, it pulled back as it announced a decrease in volume. Electric car maker Lucid

LCID

After delivery expectations fell well below estimates.

Domino’s pizza

DPZ

It cut its multi-year sales forecast, which sent its stock lower.

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Arizona Expansion.

until The Russian foreign minister was surprised by the decision to invade UkraineMost of the cabinet members were kept in the dark, according to anonymous accounts from Russian officials.

Deutsche Bank

DB

Officials attended Meetings inside Jeffrey Epstein’s home when the victims were presentSurvivors’ lawyers claim. Deutsche Bank says the lawsuit should be quashed.

The most important indicators

Here are the most active stock indexes as of 6 a.m. ET.

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“veg-xit” – The British suffer from a shortage of fruits and vegetables.

this 11-year-old girl entering ‘semi-retirement’ After I made a lot of money selling spinners and crossbows I bought a Mercedes-Benz GI.

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