International Equities

What's Happening in International Equities

US equities are trading at record highs despite rising Treasury yields, a dynamic typically associated with equity weakness but instead reflecting strong earnings growth and resilience in mega-cap technology stocks like Nvidia, Microsoft, and Meta. This outperformance has widened the gap between US and international equity markets, prompting analysis from major investors like Bridgewater Associates into the structural factors sustaining American stock market dominance. The disconnect between rising rates and rising equity valuations suggests market participants are pricing in durable earnings growth and competitive advantages concentrated in US technology and innovation sectors, rather than viewing higher borrowing costs as a headwind. For international equities, this creates a challenging backdrop where relative valuation and growth expectations increasingly favor US-listed companies, potentially affecting capital flows and regional equity performance dynamics. The sustainability of this US outperformance depends on whether the earnings growth and economic resilience driving current valuations can persist as monetary conditions tighten, a question central to international equity allocation decisions.