This note is a guest con­tri­bu­tion by Bespoke Invest­ment Group.

There has been a lot of talk this week about how "the great bond bub­ble" is about to crash and that equi­ties look attrac­tive com­pared to them.  One dat­a­point that com­men­ta­tors have been cit­ing is that the Dow's div­i­dend yield is now greater than the 10-Year Trea­sury yield.  We've heard some say that this is the first time this has hap­pened in decades, but in actu­al­ity, the Dow's yield got much higher than the 10-Year yield as recently as late 2008 and early 2009.

Below is a chart of the Dow's yield minus the 10-Year yield going back to 1920.  (Up until the early 90s, the data is weekly.)  As shown, the Dow's yield did just recently tick higher than the 10-Year yield, which is out of the ordi­nary but not with­out prece­dent.  In fact, from 1920 to the late 1950s, the Dow's yield was higher than the 10-Year yield almost all of the time.  In the 60s, 70s, and early 80s, the read­ing trended sig­nif­i­cantly lower, but since then the read­ing has been trend­ing higher.

Since the com­par­i­son has been float­ing around all week, we fig­ured we would high­light the his­tor­i­cal rela­tion­ship to give read­ers some perspective.

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