We believe that bond yields have finally bottomed. As they begin to increase gradually, investors can expect a higher ‘risk-free’ return from longer term government bonds. This, in turn, should see a jump in the required returns from other riskier asset classes such as equities, placing pressure on current valuations. Clime Analyst, Damen Kloeckner outlines how to ascertain an appropriate discount rate for securities against the backdrop of rising bond yields, using a current example. (VIEW LINK)
Please sign in to comment on this wire.