BofA Says Bonds May Outperform Stocks in Next Decade

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Bank of America strategist Savita Subramanian says 10-year US Treasuries may offer better risk-adjusted returns than equities over the coming decade. Her assessment compares Treasury yields above 5% with a valuation-based forecast of potentially lower long-term returns for the S&P 500.

"Bonds actually look interesting again," says Savita Subramanian, Bank of America’s head of US equity and quantitative strategy, as she weighs the potential returns from bonds and equities over the next decade. "The risk-return for a 10-year Treasury today is about over 5%," Subramanian tells Bloomberg Television. "Whereas when you look at the S&P 500, our valuation framework suggests that returns over the next ten years might not even be at those levels, at that 5% clip." (Source: Bloomberg)