Has the ‘Great Rotation’ begun?

The long-awaited exodus of capital out of bonds and into equities requires a very specific set of conditions. So is it happening now?

Stocks have started 2013 with a bang. America's S&P 500 index has risen to a new post-crisis high. The FTSE 100 has exceeded 6,100 for the first time since May 2008. It gained almost 4% last week, its best start to a year since 1999. Japanese stocks have hit a 23-month high. Investors poured a net $22.2bn into global stocks last week, the biggest weekly inflow since September 2007.

So "one of the biggest questions in financial markets is again bubbling", says Carolyn Cui in The Wall Street Journal. For some time now, many have predicted a "Great Rotation" by investors out of bonds and into stocks.

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