– Andrew Macken, Chris Demasi & Amit Nath
While in the whitepaper Part I we considered the likely drivers of low interest rates, explored the case of Japan and the lessons that can be taken from their economy and concluded that there is a strong case for interest rates to be remain structurally lower for a protracted period of time.
In the concluding Part II we consider the consequences of such a protracted low-rate environment on asset prices – in particular on equity prices. The prospect of sustainably low longterm “risk-free rates” of interest has driven required returns down, and boosted prices, in many financial asset classes. Yields on government and corporate bonds, and capitalization rates on real estate, have fallen. The same has not been true for the aggregate equity market…yet.
Links to both the papers are shared below:
