The bottom line: Although I think yields will remain low relative to historical levels, current bond prices, particularly those for long-dated Treasuries, look stretched, particularly now that the U.S. economy appears to be shaking off its weather related woes. Municipals offer better value, but I see few areas of the bond market compensating investors for the current implied risk.
In short, I maintain a long-term preference for equities and still believe that investors exercise caution before adding to positions in bonds. You can read more about my equity and fixed income outlooks in my new Investment Directions monthly market commentary.
Sources: Bloomberg, BlackRock research
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. He is a regular contributor to The Blog and you can find more of his posts here.