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Yields, liquidity and asset prices

Yields, liquidity and asset prices

Prerna Chandak, MBA

Vice President ETFs

As central banks around the world focus on supporting the economic recovery, the risk-free yield on holding cash has declined to near zero. Falling risk-free interest rates tend to increase the fair value of other asset classes. In this context, falling bond yields and rising equity values are a market response to falling policy rates. In this environment, a well-balanced multi asset portfolio remains the key to weathering different possible economic conditions in the future.

In his August commentary, Todd Mattina, Mackenzie’s Chief Economist and Co-Lead of the Mackenzie Multi-Asset Strategies Team, addresses the following questions:

  1. Have stock market valuations decoupled from the severe state of the global economy? 
  2. Does an allocation to long-term government bonds still make sense with bond yields near historic lows? 
  3. Does the sharply declining US dollar and record gold price indicate inflation is making a comeback?

 

For timely insights from Todd, read his August commentary, “Yields, Liquidity and Asset Prices: Implications of Prolonged Central Bank Easing for Multi-Asset Portfolios.”

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