Business
RBA’s Jonathan Kearns warns of the hidden warning behind rising bond yields – The Australian Financial Review
The Reserve Bank’s Jonathan Kearns says that if global bond investors demand higher risk premiums, that will infect other asset classes.
Mr Kearns explained that bond rates or risk-free rate sovereign rates effectively underpin the pricing of all sorts of assets.
If you have a rise in yields because of risk premia, then that can affect the pricing of a broad range of assets, he said.
Investors that thought they had a hedge from owning bonds and equities can find that all of their assets fall simultaneously through the wealth effect.
Mr Kearns said businesses were in better shape than the Reserve Bank had initially anticipated and…
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