| Posted: 1 minutes ago | Updated: 1 minutes ago | 4 Min Read
Those concerns may be taking on fresh urgency after the Fed last week forecast it would leave rates elevated for longer than many investors were expecting. If history is any indication, higher rates are a less favorable environment for equity investors. An analysis by AQR Capital Management going back to 1990 showed U.S. equities returned an average of 5.4% over cash when rates were above their median level - as they are now - compared with a return of 11.5% when interest rates were below their median.
The current ERP level has historically translated to just a 1.3% average 12-month excess return of the S&P 500 over the 10-year Treasury, according to Lerner.
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