In this artcle,I will be discussng the relationship between bond yields and stock market earnings in terms of individual
derivatives. From a fundamental level of understanding regarding capital and the rate of return, which imply interest of borrowed proceeds. Every proceed of financing that involves borrowing earns interest, as the case is with bond
investments unless someone is participating in arbitrage and donations. When an investor buys a companies stock, he she is simply borrowing capital to a company in the hopes of earning yields from the initial investment. The global economy and the financial markets are inter-connected, reflecting a mirror of each other. What I mean to expound in this article is the fact that bond yields and the stock market have a positive correlation. When bond yields rise on the longer term, earnings,return on capital, interest rates and the stock market are also expected to rise respectively.
Earnings, interest rate, bond yields and the rate of return on capital, reflect almost the same thing as synonymous words used in financial terminology. Individual stock market derivatives are affected positively when interests, yields and the rate of return are rising. Stock market dividens and the business climate are postive when bond yields are rising and better
economic prospects can be expected. Global growth that is primarily financed from a monetary level due to the demand and need for the use of currency.
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