๐ Market Overvaluation Alert
For the first time in 22 years, the 10-year Treasury yield has surpassed the S&P 500's earnings yield, signaling a critical shift:
๐น S&P 500 Equity Risk Premium:
Now at -0.44%, far below the long-term average.
๐น 5-Year Trend:
The yield difference has dropped by 5 percentage points, marking one of the steepest declines in 50 years.
๐น Implications:
10-year Treasuries, considered less risky, now pay higher yields than the S&P 500.
Historically, this dynamic suggests overvaluation in equities, potentially leading to lower returns and raising the likelihood of a market correction.
๐ญ Question:
Is this a warning sign for investors to reallocate, or can the market defy history yet again?