Free Trial
OUTLOOK

What to watch

WTI TECHS

(Z2) Remains Above Support

SOUTH AFRICA

Ramaphosa Secures Extra $10bln in Climate Funding

GOLD TECHS

Strong Rally Exposes Key Resistance

BUNDS

German Bund supply the early focus

BRENT TECHS

(F3) Corrective Pullback

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access

Soaring Real Yields And Potential Further Hit To P/E Ratios Still To Come

US
  • A relentless move higher in 10Y real yields sees them +21bps, entirely driving nominal moves, to hit 1.52% for the highest since early 2010.
  • A key factor in risk performance especially through the pandemic (break in 2011-13 shown for transparency), the below chart shows potentially sizeable further downside to SPX P/E ratios, most recently at 16.36 on a BEst basis.
  • If growth/earnings are to slow as expected (BBG cons sees GDP slowing from 1.6 to 0.9% in 2023, prior to latest aggressive tightening in financial conditions), it could have a particularly large impact on equity prices if P/E ratios are to materially correct lower.

US 10y real yields (white, inverted) and SPX P/E ratio (yellow)Source: Bloomberg

137 words

To read the full story

Why Subscribe to

MarketNews.com

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.
  • A relentless move higher in 10Y real yields sees them +21bps, entirely driving nominal moves, to hit 1.52% for the highest since early 2010.
  • A key factor in risk performance especially through the pandemic (break in 2011-13 shown for transparency), the below chart shows potentially sizeable further downside to SPX P/E ratios, most recently at 16.36 on a BEst basis.
  • If growth/earnings are to slow as expected (BBG cons sees GDP slowing from 1.6 to 0.9% in 2023, prior to latest aggressive tightening in financial conditions), it could have a particularly large impact on equity prices if P/E ratios are to materially correct lower.

US 10y real yields (white, inverted) and SPX P/E ratio (yellow)Source: Bloomberg