Corn is indeed a renewable resource, but it has a far lower yield relative to the energy used to produce it than either biodiesel (such as soybean oil) or ethanol from other plants.
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The 5.29% yield tightened relative to treasuries by eight basis points on the day leaving the spread at 586 basis points above government short-dated paper.
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Bonds rated BBB (the lowest that qualify for investment grade) yield more, relative to government bonds, than at any time since 1932.
That is a sign that high-yield bonds look expensive, at least relative to stocks, says Edward Marrinan, head of macro credit strategy at RBS Securities in Stamford, Conn.
Relative to Treasuries, the earnings yield (earnings per share divided by the share price) favors stocks.
We continue to overweight markets where credit spreads (sovereign yield spreads or CDS spreads) have declined relative to their two-year averages and where valuation ratios are cheap, including Germany, Austria, Italy, Portugal, and France.
When measuring relative value, investors subtract the proposed yield on a bond from the corresponding yield on the MMD.
Those of AA bonds might be described as non-existent but for the fact that such things are relative: five-year government bonds yield just 10bps.
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It concludes that the three most important determinants of the dollar's swings against the euro (or against the euro's component currencies before 1999) have been relative expected growth rates, bond-yield differentials and net equity portfolio flows.
Already, the relative scarcity of Treasury paper has widened the yield spread between Treasurys and other debt instruments like agencies, mortgages and corporates.
In short, by historical standards high yield bonds are currently offering only a modest yield pickup versus better-rated bonds, rather than relative to emerging markets bonds in particular.
The yield on dividend-paying equities is at or near all-time highs, relative to Treasuries, and I think represents a pretty good value right now in the marketplace.
In 2013, I expect equities to outperform most asset classes given their attractive relative valuations versus cash, U.S. Treasurys, corporate and high-yield bonds.
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