Indeed, the successive stimulus plans of central banks since the pandemic, combined with the sustained low interest rates, have flooded stock markets with liquidity that has swollen the rivers of capital allocated to equities, pushing them and their indices to their highest levels. At the same time, investors shifted out of alternative assets, especially bonds, whose yields had reached their lowest level, and thus dried up the capital flow to government bonds.

Then 2022 arrived, with its market collapse, inflation, shortages, logistical delays and complications related to the war in Ukraine. Companies valuations dropped and their shares suddenly lost their appeal.

At the same time, to counter inflation, central banks sharply raised rates, pushing bond yields to levels not seen in over a decade: The yield on the 10-year U.S. Treasury note is 3.962%, the six-month yield is 5.129%, and the yield on the German Bund is 2.28%, up from just under 0% a year ago. The Bloomberg U.S Aggregate Index (which represents high-quality bonds, including U.S. Treasuries, agency mortgages and U.S. corporate bonds) rose to 4.78% in November, its highest level since 2008.

Investors fled risk, looking for happiness in the next meadow: alternative assets (emerging equities, Treasuries, corporate bonds, commodities, cash) have regained appeal and attracted a larger share of allocations, reinforcing the momentum underway. Exit Tina, welcome Tara ("There Are Reasonable Alternatives").

Bonds may offer less performance, but they largely limit the risk of loss, and many investors are willing to cut back on the capital gain if it comes with guarantees. And even more people believe that equities will suffer further if the Western economies go into recession.

But inflation is no friend to bond investors either, and already some are predicting the end of Tara's reign. Bank of America expects 10-year U.S. Treasury yields to fall to 3.25% by the end of the year.