Valuation – S&P 500 Earnings Yield Plus 10-Year U.S. Treasury Yield Minus CPI The current low yield environment for both U.S. stocks and bonds relative to inflation presents a challenging landscape for investors, prompting many to explore alternative investment strategies to achieve desired returns. Image: Bloomberg
U.S. 10-Year Treasury Yield Around Close Presidential Elections While U.S. elections are significant in shaping economic policy and affecting investor sentiment, they do not consistently drive changes in the U.S. 10-year Treasury yield. Image: Deutsche Bank Asset Allocation
U.S. 10-Year Treasury Yields Forecast Goldman Sachs forecasts the 10-year U.S. Treasury yield to hit 3.85% by end-2024, diverging from current futures market expectations. Image: Goldman Sachs Global Investment Research
Gold and U.S. 10-Year Real Rates Gold prices typically exhibit an inverse relationship with U.S. real interest rates, as investors often shift their holdings between gold and interest-bearing assets based on the opportunity cost of owning the precious metal. Image: Gavekal, Macrobond
S&P 500 Market Concentration vs. 10-Year Annualized Forward Returns High concentration in the S&P 500 may boost short-term performance, but it often signals lower future returns, particularly during non-recessionary periods. Image: Goldman Sachs Global Investment Research
Forward 10-Year Real Returns and CAPE Valuations While a high CAPE ratio can persist for extended periods without triggering an immediate market correction, historical data suggests that such elevated valuations often precede periods of lower stock market returns. Image: Real Investment Advice
Forecast 10-Year Annualized S&P 500 Returns Based on the 10-year annualized total return forecast distribution, there’s a 72% likelihood that the S&P 500 will underperform Treasury bonds, and a 33% probability that equities will generate returns below inflation. Image: Goldman Sachs Global Investment Research
Average 1-Month S&P 500 Return vs. Change in 10-Year U.S. Treasury Yields The S&P 500 typically struggles when U.S. Treasury yields rise quickly. This is largely due to decreased stock valuation multiples, especially for high-priced mega-cap growth companies that thrive in low-rate environments. Image: Goldman Sachs Global Investment Research
10-Year Turnover of S&P 500 Constituents Over a typical 10-year period, 36% of S&P 500 constituents experience turnover. This level of turnover is significant, highlighting the challenges of tracking long-term performance for individual firms within the index. Image: Goldman Sachs Global Investment Research
Copper to Gold Ratio and U.S. 10-Year Treasury Yield The copper-to-gold ratio is often considered a leading indicator for the direction of the 10-year U.S. Treasury yield under certain market conditions. Image: The Daily Shot
10-Year Annualized S&P 500 Returns Goldman Sachs predicts that the S&P 500 will achieve an average annualized return of only 3% in the coming decade, considerably below historical norms, reflecting concerns about high equity valuations. Image: Goldman Sachs Global Investment Research