Stocks at Tech-Bubble Valuations as Inflation and Yields Rise
The P/E10 ratio hit 39.5 in June 2026, inflation is up 4.55% year-over-year and the 10-year Treasury yield averaged 4.47%.
As of June 2026 the U.S. cyclically adjusted price-to-earnings ratio, or P/E10, stands at 39.5. The year-over-year Consumer Price Index change is 4.55% and the monthly average 10-year Treasury yield is 4.47%.
The P/E10 divides a market price measure by the ten-year average of inflation-adjusted earnings to smooth short-term business-cycle effects. The long-term historical average P/E10 is 17.8.
The current P/E10 of 39.5 is more than double the long-term average. In the analysis, the late-1990s through early-2000s tech-bubble period is identified as months with a P/E10 of 25 or higher, spanning June 1997 to January 2002.
The report uses an inflation range of about 1.4% to 3.0% as a historical band associated with higher valuations. The June 2026 inflation reading of 4.55% lies above that band.
A scatter-plot in the analysis compares valuation and inflation across three periods: January 1881–December 2007, January 2008–February 2020, and March 2020 to the present. The chart marks the historical average P/E10 and highlights the 1.4%–3.0% inflation band. The October 2025 CPI figure was extrapolated from the two prior months because official CPI reporting was interrupted during a 2025 government shutdown.
A separate chart examines P/E10 against the 10-year Treasury yield, with the series beginning in 1960 following guidance that bond yields before 1960 did not consistently respond to inflation. The post-2008 period shows P/E10 ratios above 20 while 10-year yields fell below 2.5%. The current 10-year yield of 4.47% departs from those low levels and is similar to yields seen during the tech-bubble era.
The analysis presents the current market picture by comparing the P/E10, inflation and the 10-year yield to historical episodes. Charts in the assessment mark the current valuation and inflation point as within ‘‘extreme valuation territory’’ and identify the tech-bubble months for comparison.
Background: the P/E10 is also called the cyclically adjusted P/E. It divides a market price measure by the ten-year average of inflation-adjusted earnings to reduce short-term noise from business cycles. Market commentators use the metric to compare current valuations against long-term norms and specific historical episodes such as the 1997–2002 tech bubble or the post-2008 low-yield period.
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