10-Year U.S. Treasury Yield Surpasses S&P 500 Earnings Yield, Reaching a 25-Year High

The 10-year U.S. Treasury yield has surpassed 5%, overtaking the equity earnings yield measured by the inverse of the S&P 500 index's P/E ratio, as the relative attractiveness of bonds over stocks climbs to a 25-year high and breaks the nearly 20-year post-financial crisis investment paradigm of "equities outperforming debt." The rise in long-end interest rates has already caused investors who previously positioned for long-term bonds (such as holders of the TLT ETF) to incur substantial losses.