Low Hurdle
Wednesday, January 11th, 2017 Categories: Fiscal policy, QE / QT, United States, Volatility
Excess volatility set to stay near historical lows
Many analysts cite a possible break in the regime of low volatility as a potential threat to the performance US Equities. They are right, but they only have half the story. A rise in equity volatility only matters if it is NOT accompanied by a rise in Treasury volatility. If it is, there is no change to the hurdle rate which determines the risk-efficiency of equities relative to bonds.