This chart shows the ML investment grade corporate bond index yield vs the trailing SPX             earnings yield (E/P ratio). From 2004-2007 the investment grade bond index and SPX             earnings yield appear balanced near equal valuation. The red box from 2007 to 2009 marks the peak of the market to 2009 when the SPX             sunk to recession lows. Note the following period of QE when the Fed fund policy of near zero lowered bond yields relative to equity earnings yield. Lately it appears that the SPX             trailing E/P ratio and IG             corporate bond yields appear to have finally 'normalized' and returned back to a range of equal valuation.

However, investors can reasonably expect increased volatility ahead as the Fed begins this next phase of QT. The Fed forecasts a rise in the overnight lending rate and continued unloading of the balance sheet . This is likely to stress the equity and investment grade bond valuations which are currently 'priced to perfection'.

Chart data:
'QUANDL:ML/USEY'-'QUANDL:MULTPL/SP500_EARNINGS_YIELD_MONTH'


Comment:

Here's another look at these indexes separately, instead of as a spread
ML investment grade bond yield in purple
SPX trailing earnings yield in orange (E/P ratio)
EN English
EN English (UK)
EN English (IN)
DE Deutsch
FR Français
ES Español
IT Italiano
PL Polski
SV Svenska
TR Türkçe
RU Русский
PT Português
ID Bahasa Indonesia
MS Bahasa Melayu
TH ภาษาไทย
VI Tiếng Việt
JA 日本語
KO 한국어
ZH 简体中文
ZH 繁體中文
AR العربية
Home Stock Screener Forex Screener Crypto Screener Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing My Support Tickets Contact Support Ideas Published Followers Following Private Messages Chat Sign Out