Wall St Week ahead: Another recent inversion could provide support for stocks

A recent note from Bank of America-Merrill Lynch Global Research's Savita Subramanian recommended investors stick with stocks over bonds over both the short and long-term, in part due to their dividend yield and relative cheapness over bonds, while also noting fewer than half of their bear market signals have been triggered.

NEW YORK: A decline in interest rates on long-term U.S. government bonds below the average stock dividend yield has received less attention than an inverted Treasury yield curve, but it could be a reason stocks find support after a bruising August.

After the S&P 500 <.SPX> suffered its first monthly drop since May, in part because the Treasury curve inversion is seen by many as a harbinger of recession, equities have gotten off to a solid start in September, historically their worst month of the year. The uncommon Treasury bond/dividend yield inversion is providing a level of support.