Market Valuation, Inflation and Treasury Yields: June 2026

The article argues that US stock indexes remain significantly overvalued based on the P/E10 valuation metric, implying cautious long-term return expectations for equities. It highlights that the current P/E10 reading of 39.5 is well above the historical average of 17.8 and sits in what the author calls “extreme valuation territory,” similar to the tech bubble. Inflation is currently 4.55% year over year, outside the historically favorable 1.4% to 3.0% “sweet spot” associated with higher valuations. The piece also notes that the 10-year Treasury yield is 4.47%, suggesting the market has moved away from the unusual post-financial-crisis era of low yields and high valuations. Overall, the message is bearish for US equities and supportive of a more cautious stance toward stocks, while reinforcing the relevance of Treasuries as a valuation benchmark.