The 10-year Treasury sold off yesterday morning until the yield
broke through 2.00%. After doing so, support finally came back in for
Treasuries and they rallied a few basis points lower through the remainder of
the day. This was the first time the 10-year yield has reached 2.00%
since April. Coming into this morning, the yield is back at 1.97%.
Stocks were flat yesterday as investors are increasingly anxious about how high
they have run.
The S&P is just over 1,500, its highest price since 2007.
However, the P/E multiple today is below 15 and it was between 17 and 18 back
in 2007. If the market traded back to a 17.5 multiple with today’s earnings, it
would mean another 17% increase, giving the bulls more reason for optimism.
Fundamental valuations should be lower today, though, as the longer-term growth
outlook is weaker than it was five years ago.
Moreover, much of the recent run in stocks is
surely the result of Fed asset purchases which will presumably
end at some point.
The Market Today
ONLINE
No comments:
Post a Comment