Still not falling asleep at the wheel

The US 30-year Treasury yield stands at 5.51% this morning, versus just 1.67% in December 2021.

Over the past six years, the 30-year Treasury price return index has fallen around 60%, while US nominal GDP has increased by 63%.

As BofA’s Michael Hartnett summarizes it, the 2020s are an era of fiscal excess, political populism, de-globalization, resource nationalism, trade and AI wars — and an inflationary boom.

The contrast is striking: bonds are pricing the end of cheap money, while equities continue to price abundant growth.

At ECP, we believe that higher interest rates will eventually come back to haunt equity markets.

Still not the time to fall asleep at the wheel.