Yields Are Back On The Menu

2025-05-29 06:35:00 ET

Summary

• At the most fundamental level, stock prices are derived from expectations about future earnings. A company’s valuation is typically expressed as a multiple of its earnings, such as the P/E ratio.
• One of the most direct threats to high stock valuations is rising interest rates, especially those on long-dated Treasury securities like the 10-year yield.
• Gold has been asserting its role as a safe-haven asset amid growing economic and geopolitical uncertainty.
• Given the layered complexity of today’s market environment, what should investors be watching?

By Ryan J. Puplava, CMT, CTS, CES

Valuations, Earnings, and the Pressure of Rising Rates

The stock market is a complex machine powered by investor sentiment, corporate earnings, fiscal health, and macroeconomic conditions. Right now, all four of these engines are being tested. From Moody’s downgrade of U.S. debt to renewed concerns over Treasury yields and the persistent uncertainty of global trade tensions, investors are facing a confluence of risk factors. Despite these headwinds, equity markets continue to find moments of relief, such as Monday’s rally following the postponement of new tariffs on Europe....

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