- I believe higher risk asset valuations such as equities and commodities are being subsidized by low US bond yields. I also believe this is unsustainable.
- In scenario one, where risk assets continue to rise - bond yields will eventually be pulled up as well thereby reducing the low rate subsidy to risk asset valuations.
- In scenario two - lower than expected UST yields could be sending a warning on a weakening intermediate term growth and inflation which would also lower risk asset valuations.
For further details see:
Risk Assets Should Not Take Solace In Low UST Yields