If rising rates were enough to end a bull market, we’d have entered a bear market long ago

The Federal Reserve's implied equity valuation model, which compares stock earnings yields to government bond yields, has signaled a bearish outlook. Historically, when this model turned negative, it preceded significant market downturns, though the relationship has weakened in recent years. Current stock valuations remain elevated relative to bond yields, a condition that has persisted through multiple rate increases since 2022.

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