Merrill Lynch sounds warning on government bonds

Merrill Lynch's chief investment officer Bill O'Neill has advised investors to steer clear of government bonds, saying they will only offer value in a double-dip environment.

According to O'Neill, intoday's low growth and low return environment, investors will find more value in corporate bonds and equities over government bonds. "Despite lower yields in credit, valuations are still fair, particularly for high yield. The valuation offered by equities relative to government bonds is attractive for longer term investors, however, for those with shorter time horizons, a focus on price is necessary," he said. Within equities, O'Neill pointed to emerging markets as a sweet spot, saying they are likely to experience stronger economic growth in the coming years. ...