The Tension Between Equities and Bonds

Earnings growth, not falling rates, is why equities have shrugged off a 100bp rise in Treasury yields this year.

• Yields up, stocks up: 10-year Treasury yields rose ~100bps in 2025 while global equities gained ~13%, defying textbook valuation logic.
• Earnings growth is the offset: S&P 500 profits rose ~30% y/y (median company mid-teens), using the Gordon Growth Model's growth term to counteract higher discount rates.

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