In 2014, Bonds Outperformed Stocks
Simit Patel | Dec 24, 2014 11:53PM ET
An article on ZeroHedge notes that in 2014, bonds outperformed stocks. This is another sign of deflation -- though it should be noted that both bonds AND stocks were positive on the year, which is not consistent with the textbook concept of a deflationary spiral, and is perhaps more a result of the ongoing stimulus from the world's central banks.
US stocks did outperform foreign equities; the chart below plots US 20+ Treasury bonds via the iShares Barclays 20+ Year Treasury ETF (ARCA:TLT) (candlesticks), the S&P 500 via the SPDR S&P 500 ETF (ARCA:SPY) (brown line) the DAX (blue line) and the iShares FTSE/Xinhua China 25 Index (ARCA:FXI), index of Chinese equities (red line); we can see that US assets outperformed, which is consistent with the view of a deflationary global flight to safety into US dollars and dollar-denominated assets.
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