Yield is a good measure of an assets current value; a high yield suggests a low price and a low yield and high price, effectively falling yields mean that more people are willing to pay for that yield and the price starts to rise. For example a 10 year bond pays interest of £7 on a £100 nominal value the yield is 7%, so if investors facing declining interest rates on deposits like the idea of a 7% return and are willing to pay £110 for the same bond the yield they receive is actually 6.36% (£7 / £110) and this can go on indefinitely forcing yields ever lower. The same is true of equities, and we can have a look at the dividend yield that is on offer. Look at the graph below that shows how yields on Cash, Gilts and Equities have all declined.
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