Here's an interesting chart for stock investors in an era of rising bond yields

Now here’s an interesting chart in an era of rising global bond yields.


From Bank of America Merrill Lynch, it plots US dollar-denominated stock market returns by individual nation versus the size of their current account balance as a percentage of GDP over the past two years.

Over that period, coinciding with a gradual lift in global bond yields, stocks in those nations that have run a current account surplus have, from a broad perspective, tended to outperform those that have run a current account deficit.

Put another way, those with excess savings have generally produced larger US dollar-denominated returns than those relying upon the kindness of others to make up their funding shortfall.

That comes with the disclaimer that the US was excluded from BAML’s analysis, and clearly stocks there have performed strongly despite continued deficits.

However, while past performance is not indicative of future returns, it does provide some food for thought for stock investors should bond yields continue to push higher.

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