Musings on Markets

JANUARY 27, 2022

Put simply, no central bank, no matter how powerful, can force market interest rates down, if inflation expectations stay low, or up, if investor are anticipating high inflation. For those who track the slope of the yield curve, and I am not one of those who believes that it has much predictive power, it was a confusing year.

Risk-free Rate 87

Risk-free Rate Treasury Price to Book Start-ups 87

Musings on Markets

MARCH 25, 2021

The first has been the steep rise in treasury rates in the last twelve weeks, as investors reassess expected economic growth over the rest of the year and worry about inflation. Coming in 2020, the ten-year T.Bond rate at 1.92% was already close to historic lows. In particular, the Fed's own assessments of real growth of 6.5%

Equity 52

Equity Risk-free Rate Treasury Start-ups 52

Musings on Markets

MAY 24, 2021

Interest rates : To understand the link between expected inflation and interest rates, consider the Fisher equation, where a nominal riskfree interest rate (which is what treasury bond rates) can be broken down into expected inflation and expected real interest rate components.

Treasury 55

Treasury Start-ups Risk Premium Price to Book 55

Musings on Markets

JANUARY 19, 2022

In a post at the start of 2021 , I argued that while stocks entered the year at elevated levels, especially on historic metrics (such as PE ratios), they were priced to deliver reasonable returns, relative to very low risk free rates (with the treasury bond rate at 0.93% at the start of 2021).

Risk Premium 82

Risk Premium Risk-free Rate Start-ups Equity 82