Global Market Implied Equity Risk Premiums The low U.S. equity risk premium reflects a market where investors earn little to no additional expected return for taking on the higher risk of stocks compared to bonds. As a result, equity investing becomes more challenging. Image: Goldman Sachs Global Investment Research
U.S. 10-Year Treasury Term Premium The increasing term premium signals that investors require greater compensation for the risks inherent in holding longer-term bonds, reflecting increased concerns about interest rate and inflation over longer durations. Image: Goldman Sachs Global Investment Research
S&P 500 Equity Risk Premium With the U.S. equity risk premium at historically low levels, equity investors face a more challenging environment, as the risk-reward trade-off is less attractive than before. Image: The Daily Shot
Valuation – Magnificent Seven Forward P/E The Magnificent 7 stocks still trade at a premium over the rest of the S&P 500, but that premium has narrowed sharply in 2025 due to underperformance, slower earnings growth, and investors shifting interest to other sectors. Image: Goldman Sachs Global Investment Research
S&P 500 Equity Risk Premium With the U.S. equity risk premium at low levels, investors face a difficult landscape in which the risks of equity investments may not be sufficiently rewarded. Image: BCA Research
S&P 500 Equity Risk Premium With the S&P 500 equity risk premium hitting multi-decade lows, investors may find bonds more appealing than stocks. Image: Goldman Sachs Global Investment Research
Equity Risk Premium The equity risk premium, at the 94th percentile from 2010 and at the 67th percentile from 2000, suggests that investors may not be receiving adequate compensation for the risks associated with investing in U.S. stocks. Image: J.P. Morgan Equity Macro Research
Equity, Bond, FX and Oil Volatility Premiums Volatility premiums have significantly declined across asset classes after the U.S. elections. As election results become known, market uncertainty diminishes, leading to lower volatility premiums and increased stability. Image: Deutsche Bank Asset Allocation
S&P 500 Equity Risk Premium Despite potential in U.S. equities, the decline in equity risk premium suggests caution is needed, prompting diversification across asset classes for risk management. Image: BofA Global Research
S&P 500 Equity Risk Premium Considering the substantial decline in the equity risk premium, which currently stands well below its historical average, should investors approach U.S. equities with caution? Image: BofA US Equity & Quant Strategy
U.S. Equity Risk Premium – Long-Term View Should investors approach U.S. equities with caution due to the significant decline in the equity risk premium, which stands well below its historical average? Image: Topdown Charts