Ed Yardeni has spent decades telling investors when to lean in and when to duck. Right now, his message is: get ready to lean in.
Yardeni Research expects the 10-year US Treasury yield to peak somewhere between 4.75% and 5%, a level the firm views as a buying opportunity for both bonds and equities.
The yield climb that got us here
The 10-year Treasury yield has had quite a year. It started at 3.96% and has climbed to 4.63%, a move of roughly 67 basis points that has rippled across every corner of the market.
The S&P 500’s forward price-to-earnings multiple has moved in the opposite direction you’d expect given rising rates, climbing from 19.1 to 21.1. That divergence is exactly what has Yardeni watching for a potential P/E-led pullback. Stocks have gotten more expensive even as the discount rate used to value them has gone up.
