2 + 2 still equals 4.
That’s the rough math behind a bullish case for stocks outlined by Credit Suisse’s Jonathan Golub, chief U.S. equity strategist, in a Monday client note.
To illustrate his point, Golub took the biggest BBB bracket of U.S. companies with investment-grade credit ratings and outlined why current 2.2% bond spreads, plus the roughly 2.1% yield on 10-year Treasury
TMUBMUSD10Y,
rate, still make for a historically low 4.4% borrowing cost, (see chart) a positive for stock valuations.
Even at 4.4%, borrowing costs are pretty cheap for most big, public U.S. companies.
Credit Suisse
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