On the relative valuation of US equities and bonds

One reason why Fed tightening may not rattle the US stock market is that the price of equity is currently low compared to that of debt. Our forecast is that the S&P 500 will end next year at 2,200, about 4% higher than its level today, even though we project that the 10-year Treasury yield will have climbed to 3.5% by then, from around 2.4% now.


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