Brexit Flight to Quality

Brexit is spurring a flight to quality move into US Treasuries.  As of Tuesday, June 28, 2016 the yield on a 10-year Treasury was 1.4613% versus the dividend yield on the S&P 500 of 2.15%.  This is a rare occurrence. In January 2015 it was pointed out that for just the fourth time in over 50 years, the S&P 500’s dividend yield moved above the yield on the benchmark 10-year Treasury note. At that time, Jeffrey Saut, chief investment strategist at Raymond James said it took the Great Recession in 2008, followed closely by a downgrade of the U.S.’s credit rating in 2011, to snap a 46-year streak where 10-year Treasury yields were above the S&P 500 dividend yield.