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    BofA’s Subramanian: ‘The S&P 500 is trading like it’s the new risk-free rate’

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    BofA’s Subramanian: ‘The S&P 500 is trading like it’s the new risk-free rate'

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    The S&P 500 (SP500) is now trading as if it were the new risk-free rate, with valuation metrics reaching unprecedented levels, said Savita Subramanian, head of U.S. Equity Strategy and U.S. Quantitative Strategy at BofA.
    The index trades rich on
    Quick Insights
    Recent structural improvements—lower debt, higher earnings predictability, better quality, and more asset-light models—suggest some justification for higher valuations compared to history.
    Resolution may come via strong earnings, sales, or GDP growth if current economic conditions persist, or through price declines if fundamentals disappoint.
    Greater predictability stems from lower floating-rate debt, more high-quality companies, asset- and labor-light business models, automation, and possibly future gains from AI and deregulation.
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