Currently:
10 year bond: 2.98% (14 month low)
5 year bond: 1.79% (all time low)
2 year bond: 0.61%
If I remember correctly, between the fall of 2008 and the spring of 2009 (when the credit crunch was at it's worst), the 10 year was @ 3%; the 5 year was @ 2%; and the 2 year was @ 1%.
What is the bond market telling us? Is the bond market predicting another near term market meltdown?
Personally, I have been skeptical of the recovery. From the articles I have read in the WSJ there just seems to be too many areas of the economy that are having problems. (Mortgages, Biz loans, pensions, jobs, state budgets, etc.)
Personally, I have been wary of predicting any kind of recovery in my SSG's. I have always chosen the lowest P/E multiples (or close to the lowest) from not only the past fives years; but, over the past 10 years. I have also used the recent market low prices (either September 2008 or March 2009) for my low price on my SSG's.
I know the effect that inflation has on P/E ratios. I am concerned about future inflation with the current level of money supply.
What effect does deflation have of P/E's? Does deflation deflate P/E ratios as well?
Personally, I think this is a time to be very very conservative when applying judgements on the SSG.
Nick