We are witnessing a historic shift. The annual spread between the S&P 500's earnings yield and the 10Y Note yield is down to -1.5 percentage points, its lowest since 2009. Since 2022, this yield difference has fallen -440 basis points, its largest 5-year decline since the 1970s

We are witnessing a historic shift. The annual spread between the S&P 500's earnings yield and the 10Y Note yield is down to -1.5 percentage points, its lowest since 2009. Since 2022, this yield difference has fallen -440 basis points, its largest 5-year decline since the 1970s. As a result, the S&P 500's equity risk premium is on track to post its 3rd consecutive negative annual reading, the longest streak since 2002. This suggests that, on a yield basis, theoretically less risky 10Y Treasuries are now more attractive than the S&P 500. In other words, investors are receiving a higher yield from Treasuries than from the S&P 500, despite the additional risk of owning stocks. Historically, a negative equity risk premium has been associated with strong risk appetite and stretched equity valuations. We expect an eventful Q4 ahead.