November 24, 2008

That's something that hadn't happened since 1958.
- the dividend yield on the Standard & Poor's 500 stock index touched 3.57% at 1:13 PM Eastern time, exceeding the 3.54% yield on the benchmark Treasury 10-year note, according to Bloomberg News.

mispriced - implies the consumer price index will rise just 0.64% annually for the next 10 years. Indeed, that lack of difference also reflects the low level of expected future inflation, Kass adds. That also is reflected in the so-called TIPS spread (the difference between regular and inflation-indexed notes), which implies the consumer price index will rise just 0.64% annually for the next 10 years. Adds Dominic Constar, interest-rate strategist at Credit Suisse, the convergence of stock and Treasury yields suggests that corporations, including banks, have been slow to cut payouts "as the economy teeters on a deflationary abyss."

The three-month T-bill yields barely above 0%. The one-year note offers less than 1%.
But frazzled Main Street investors shouldn't blindly shadow the supposed "smart money." When the panic trade ends (Friday's markets offered a glimmer of hope), the pros will seek some degree of risk and will pull money out of Treasurys. Treasury prices will move lower, leaving potential capital losses for those who don't flee government paper as fast.

Rough week Nov 17 - 21st: