In a financial shift that hasn’t been seen in over 50 years, the U.S. bond market’s value has dropped to just 68% of the U.S. stock market’s value, marking the lowest ratio since the 1970s. This is a significant structural change in the composition of U.S. capital markets and highlights the overwhelming dominance of equities in today’s investment landscape.

To understand the scale of this transformation, consider that this ratio has been cut in half over the past 14 years, meaning stocks have drastically outpaced bonds in growth and market value during this period. In simpler terms, the U.S. stock market is now 50% larger than the entire bond market—an unprecedented milestone in modern market history.

Much of this shift has happened over a relatively short span of time. Since the beginning of 2020, the total market value of all publicly traded U.S. corporate equities has soared by $38 trillion, a massive 69% increase. During that same time, the total market value of U.S. debt securities—including corporate, government, and mortgage-backed bonds—has grown by $17.8 trillion, or 40%. While both asset classes have expanded, the pace of growth in equities has left bonds far behind.

This imbalance can be viewed through a broader historical lens. From 1945 to 1950, data was interpolated from annual figures, and after 1950, quarterly data has been tracked. The ratio of bond market value to the stock market saw its previous lows during the late 1960s and early 1970s, dropping to just below 70%. But never before has the ratio dropped so low in the context of such high nominal market values.

The stock market’s current dominance reflects a number of underlying trends. Strong corporate earnings, the rise of technology-driven firms, low interest rates for much of the last decade, and a shift in investor preference toward risk assets have all contributed to the rapid rise in equity valuations. At the same time, while bond markets have also expanded, their returns have been more muted, especially in real terms, due to inflation and tighter monetary policy in recent years.

Today, this dramatic divergence raises important questions about capital allocation, portfolio diversification, and the structural resilience of markets in the face of changing economic dynamics. Whether this new phase of stock market dominance will persist—or give way to a bond market resurgence—remains to be seen. But for now, the U.S. equity market stands at its most dominant point in history relative to bonds.

Disclaimer:
This article is for informational purposes only and does not constitute investment advice. Market data and trends are based on publicly available sources and historical records. Readers should perform their own due diligence or consult a financial advisor before making investment decisions.