# S&P 500 Earnings Yield Falls Below 10-Year Treasury Yield

By Enna Lee

Canonical URL: https://www.tokenpost.com/news/investing/29847
Published: 2026-10-11T15:38:51.000Z
Updated: 2026-10-11T15:38:51.000Z
Section: Investing

> The index’s trailing earnings yield was about 3.7% against a 5.31% 10-year Treasury yield, while forward earnings implied a narrower gap.

U.S. stocks are trading at a negative equity risk premium against Treasurys, with the S&P 500’s trailing earnings yield below the yield on 10-year government debt as valuations remain elevated.

The S&P 500 closed at 7,811.51 on Friday, Oct. 9, less than 0.1% below its record close of 7,818.93 set Tuesday, Oct. 6. At the record-close level, the index traded at about 27 times trailing earnings, implying an earnings yield of roughly 3.7%.

The 10-year Treasury yield reached 5.31% on Monday, Oct. 5. Comparing that yield with the S&P 500’s earnings yield produces an estimated negative spread of about 1.6 percentage points.

The calculation is an estimate rather than an official equity risk premium measure. Results vary depending on whether the comparison uses trailing or forward earnings, as-reported or adjusted profits, and different bond-yield benchmarks.

A forward price-to-earnings ratio of 19.0 implies an earnings yield of about 5.3%, roughly matching the 10-year Treasury yield. The difference shows how much the comparison changes when expected rather than trailing profits are used.

Lance Roberts described the equity risk premium as “the thinnest it’s been in a generation.” He said, “The bond market is finally paying investors to be patient. The stock market is still charging full price for impatience.”

A historical analysis of monthly data since 1950 found that periods with a negative equity premium and an earnings yield below 5% produced an average real 10-year return of 3.7% annually. More than one in four of those periods ended with a negative real return.

Periods with a negative premium but an earnings yield above 5% produced an average real 10-year return of 10.3% annually, with losses occurring in roughly one of 20 periods.

The bullish case for stocks rests partly on earnings expectations. Third-quarter S&P 500 earnings growth was estimated at 29.6%, while estimates rose 1.4% during the quarter.

The next major market tests include the September consumer-price report, scheduled for Wednesday, Oct. 14, at 8:30 a.m. ET (12:30 p.m. UTC), major-bank earnings and the Federal Reserve’s Oct. 27–28 meeting.