Higher Rates Compress Growth Stocks The market s valuation is stretched but has been justified based on historically low interest rates which have been deemed low enough to support a P/E ratio of 20 for 2022 earnings. That is changing as Treasury rates have pushed higher and are now approaching the highs recorded in March 2020.
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If Treasury rates breakout above those highs the market could be vulnerable to a quick valuation check. As noted in recent weeks, Longer term the 30-year has the potential to rise to 2.15% to 2.35%.
Interest Rate Spike Could Derail the Equity Buying Binge
“The economy is on the mend and vaccine distribution is improving which provides the back drop supporting the buy-the-dip mentality no matter how shallow.
Please share this article - Go to very top of page, right hand side, for social media buttons. There is no doubt that the bull market that began in March 2020 after a 35% plunge has evolved into a speculative binge that has further to run. The expectation was that the S&P 500 would experience a sharp decline that would bring it down to 3550 before a subsequent rally took the S&P 500 above 4000.