One of them is lying.
Stock prices are roughly earnings divided by the rate.
At 5.19% on the 10-year you get paid 5% to do nothing. To own the S&P instead, you have to believe earnings grow fast enough to beat that hurdle.
That belief has a name: AI.
It’s why the Nasdaq 100 sits closer to its high than the S&P.
So the tapes disagree.
Bonds: oil, inflation, deficits, Japan selling duration — money is expensive.
Stocks: AI profits will outrun the coupon — pay up anyway.
They can coexist for a while. They did in 2023–24, when the market still priced cuts.
This is not that tape. The 10-year is at a 20-year high and the cut is not coming.
One of them gives.
Stock prices are roughly earnings divided by the rate.
At 5.19% on the 10-year you get paid 5% to do nothing. To own the S&P instead, you have to believe earnings grow fast enough to beat that hurdle.
That belief has a name: AI.
It’s why the Nasdaq 100 sits closer to its high than the S&P.
So the tapes disagree.
Bonds: oil, inflation, deficits, Japan selling duration — money is expensive.
Stocks: AI profits will outrun the coupon — pay up anyway.
They can coexist for a while. They did in 2023–24, when the market still priced cuts.
This is not that tape. The 10-year is at a 20-year high and the cut is not coming.
One of them gives.