A sharp rise in rates would likely be needed to derail the stock market, according to Goldman Sachs.

The benchmark S&P 500 has slipped 5% off its all-time high as inflation and over potential changes to Fed policy have awakened investors to the idea that easy money could be coming to an end.

“We continue to believe the speed and composition of rate moves will matter more for equities in the near-term than the level of rates,” wrote a team of Goldman Sachs strategists led by Ryan Hammond. “Equities remain attractively valued relative to the level of interest rates.”

Without any changes to the S&P 500’s price-to-earnings ratio the 10-year yield would need to rise from its current level of about 1.5% to above 2.3% for relative equity values to be expensive compared to their long-term averages.

The benchmark 10-year yield has since September 14 climbed 26 basis points from 1.28% to 1.54% as investors have begun to price in the possibility the Federal Reserve will begin to taper its asset purchases before the end of this and raise interest rates as early as next year amid concerns over inflation.

At the same time, the real 10-year Treasury yield, which factors in inflation, rose by 20 basis points from -1.05% to -0.85%.

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