Some see tighter monetary policy as the biggest threat to the US stock market. But its onset did not have a major effect during the last three major Fed tightening cycles. What’s more, the fact that the cyclically-adjusted earnings yield is higher today than the yield of 10-year Treasuries – unlike at the outset of these three tightening cycles – suggests the latter could increase in response to tighter monetary policy without making the prospective return on equities appear unreasonably low.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services