While recession concerns have been a major driver of equity returns in 2022, another headwind for stock returns, particularly high-growth companies, is the move higher in bond yields. This week’s chart of the week shows the relationship between the price-to-earnings ratio for the S&P 500 and the yield on the 10-year U.S. treasury going back to 1990. The high-yield bonds go, the more attractive they become, and the more they compete with stocks.

Source: Bloomberg

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