While the valuation of the S&P 500 appears high in absolute terms – even after the falls in the index in 2022 so far – it seems far less stretched once the still historically low real yields of US Treasuries are considered. And it would probably take a much larger adjustment in Fed policy than we anticipate over the coming years to change that markedly. With this in mind, although we expect the S&P 500 to decline a bit further over the next year or so, we are not anticipating a big multi-year bear market in US equities.
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