State Street Investment Management’s Chris Carpentier examines why US equities have remained resilient even as 10-year Treasury yields approach 5%.
- Higher real yields have compressed the S&P 500 forward P/E from roughly 23x to about 19x, confirming that valuations are still sensitive to discount rates.
- Stronger earnings expectations have so far offset that valuation drag, supported by improving profitability and revenue trends.
- The key risk is that earnings momentum weakens through softer growth, higher inflation, rising real yields or a slowdown in AI-related investment.
Explore the full report to understand why the interaction between rates and earnings matters more than the absolute level of yields.
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