Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations for investment returns. This analysis focuses on the P/E10 ratio, a key indicator of market valuation, and its correlation with inflation and the 10-year Treasury yield. Market Valuation (P/E10) and Inflation The "sweet spot†of 1.4% to 3.0% inflation has historically supported higher market valuations. Currently, the P/E10 stands at 38.6, with a year-ove ...