Bonds compete with equities – higher yields with rising interest rates

Dusseldorf Tara has moved up the list of the most popular German girl names in recent years. But not only there. Tara also appears frequently in the investment outlooks that banks and fund companies are presenting these days – as an acronym for “There are reasonable alternatives”.

These sensible alternatives mean above all bonds. After the significant increase in yields this year, interest-bearing securities have become more interesting again and are thus competing with equities as an investment.

The US bank Goldman Sachs even propagated in May that Tara could replace Tina. Tina stood for “There is no alternative”. This acronym encapsulated the case for stocks during the long periods of zero and negative interest rates when bonds were no good.