After a nine-year bull run, equity valuations have risen above long-term averages. But considering that bond yields remain low by historical standards, current levels may not be as excessive as they first appear. Strong earnings and global economic growth also provide an attractive backdrop for companies. However, if rates move substantially above 3%, equity prices could be pressured. Especially while valuations elsewhere in the world remain low on a relative basis, it may be time to consider rebalancing portfolios toward non-U.S. markets.
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