We're Back to Normal Rates, Says Ed Yardeni

The US economy remains resilient, achieving record highs in real GDP and stock market performance despite persistent global shocks. Current interest rate trends reflect a return to "normal for longer" rather than a sustained "higher for longer" environment, with bond yields aligning with nominal GDP growth. Productivity growth, potentially reaching 3-4% due to technological advancements, supports an ongoing earnings boom. While geopolitical tensions and China’s deflationary pressures—characterized by excessive credit and real estate instability—present risks, the US market continues to climb a "wall of worry." Speculative excesses in sectors like AI remain a concern, yet the absence of systemic bank involvement suggests a different risk profile than the 2008 financial crisis. Ultimately, market performance remains robust, frequently decoupling from the noise of Washington’s fiscal and monetary policy debates.