This chart is essentially a picture of how “certainty” and “uncertainty” are priced.
What is clear is that the value placed on certainty has rocketed. U.S. Treasuries now trade at a P/E ratio of close to 70x, while uncertainty, in the form of equities, trades at a multiple of 20x. Credit, with its intermediate risk profile, comes in at 35x.
For Treasuries, a PE of 70x may seem high, but extraordinary central bank policies such as asset purchases and fears of recession could conceivably push the Treasury P/E to infinity (if yields go to zero).