Ketchup
After a month with no updates until today, not that much has changed in the valuation picture except that bonds, both on the government and on the corporate side, have become just a little bit more competitive with stocks.
The S&P 500 sits just above 1300, giving it an "earnings yield" (inverse Price-to-earnings ratio) of 5.86% (as always, we're being safe and using 12 months trailing "as reported" earnings in this calculation).
Meanwhile the yield on the 10-Year Treasury note has risen to 4.7%, and may rise higher tomorrow when the Fed raises short rates to 4.75%.
Corporate bonds provide a tighter race for stocks, with the AAA-rated 10 year composite bond rate at roughly 5.44%.
Of course this means that it is becoming more expensive for corporations to borrow money, and this has the potentional to hit bottom lines, thus degrading earnings, thus undercutting stocks.
Asset allocation is a topic that I will soon revisit, but I will say that in this environment I am comfortable enough to be slowly, gradually rebalancing my portfolio to be bringing my allocation to bonds up into line with my target. Certainly something cataclysmic could happen to interest rates, savagely knee-capping the value of my bond portfolio, but if such an event occurs, stocks are likely to take a beating as well, and I'll still be getting my interest payments on the bond funds, reinvested for more shares at the lower prices.