QV Investors Q3 Letter: Earnings Growth Outpaces Yield Concerns
QV Investors reported that S&P 500 earnings per share rose 29.7% year-to-date, while TSX Composite EPS increased 17.8%. The letter said strong earnings have offset worries about higher bond yields, and the S&P 500 forward P/E fell from 22x to 19x by the end of September. It added that sustained earnings growth will be crucial if bond yields continue to pressure markets.
QV Investors' Q3 2026 letter, published Oct. 8, reported that S&P 500 per-share profits climbed 29.7% year-to-date, while TSX Composite per-share profits rose 17.8%. By late September, the S&P 500's forward price-to-earnings ratio had eased from 22x to 19x, as profit gains countered yield-related valuation fears.
The letter also traced a broad bond sell-off: U.S. 10-year Treasury yields recently hit 5.3%, a level unseen since 2002, and Canadian, German, and Japanese long-term yields also advanced. Central banks pointed to Middle East energy supply disruptions, while real yields—rather than expected inflation—appeared to drive nominal yields upward.
If borrowing costs stay elevated, households and businesses with debt could face tighter budgets, while equity investors may depend more on actual profit growth than multiple expansion. Pension funds and savers might benefit from higher bond yields, though volatile markets could unsettle retirement accounts. The durability of earnings may shape hiring, investment, and consumer confidence, but the outcome remains uncertain.