Bond Sell-Off Continues

By Peter Brock, August 21, 2026
The gradual decline in intrinsic value over the past several months and the persistent sell-off in the corporate bond market are directly linked. The economy itself is plugging along, but its financial underpinnings show signs of strain, including biggies like inflation that’s too high, government spending that is too high and a stock market that is…you get the picture.

The S&P 500 started to trade in the BV danger zone on March 18, 2022 (when the S&P 500 was 4463). Based on historical relationships, the danger zone begins 30 percent above fair value. This is a risky place to be, where the market is vulnerable to larger than normal bear markets and ten-year expected returns are negative.*

*-1.2% per year over the subsequent decade (median compound annual real total returns, S&P 500, 1960-2025)

Brock Value Latest Ten Years

Ten years of Brock Value, showing fair value vs the S&P 500 (above) and relative pricing (below).
US GDP (Est) Corp Bond Yield S&P 500 Brock Value Overpriced By
$32.8 t 5.57% 7674 2952 160%
These are the latest numbers, updated to August 21. With US GDP at an estimated $32.8 trillion and medium-term corporate bonds yielding 5.57%, the intrinsic value of the S&P 500 index as measured by Brock Value is 2952.
By comparison, the S&P closed at 7674 on August 21, 160% above Brock Value. Click the chart to enlarge.

Understanding Brock Value charts

Brock Value is the first clear answer to the question: what is the market worth? BV is a valuation metric with just two inputs: GDP and interest rates. Compared to questionable old-school metrics (and even popular ones like Shiller’s CAPE), BV provides useful measurements which can be used to over or under weight equities in an asset mix.
brock value 1960 to present

The red and green lines fence in the normal range of the market, 30% higher and 20% lower than BV, the white line, respectively. Click chart to enlarge.
Valuation Returns
Above Red Line -1.2%
Fair Value 6.5%
Below Green Line 10.0%
Subsequent 10-year returns, median compound annual real total returns, S&P, 1960-2025

The red and green lines found on most of the Brock Value charts on this site indicate the normal range of the market. The red line indicates 30% overpricing, while the green line represents 20% underpricing. These guidelines serve as boundaries, beyond which valuation is extreme in one direction or the other. When the market (the yellow line) trades above the red line, it is highly overpriced. When this happens, returns over the following ten years tend to be negative. Conversely, when the market trades below the green line, it is underpriced and returns over the next ten years will most likely be much higher than average.