Rational Dissent Episode 007. Are Yields Good Enough To Compete?

Treasury yields near 4.75% represent a fair value relative to current nominal GDP growth of 5-6%, yet they struggle to attract demand due to inflated investor expectations for double-digit returns. While central banks previously dominated the bond market as price-insensitive buyers, private investors now hold the majority of Treasury debt, forcing yields to compete against equities, cash, and direct lending. Equities remain the preferred alternative for many due to their growth potential, while cash provides a competitive yield with superior liquidity. Because Treasuries are essential for government funding, they must offer yields that eventually force a reallocation from riskier assets if demand remains stagnant. Ultimately, bonds serve as crash insurance, but current market sentiment suggests that a significant financial correction may be required before investors broadly pivot toward fixed income as a primary asset class.