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<p>Let’s not mistake the positive gap between nominal GDP growth and Treasury yields as an indicator of macroeconomic health. The real issue lies in real yields, term premiums, primary deficits, and debt rollover costs. Growth may be strong, but sovereign duration risk can still be repriced simultaneously. GDP growth does not offset the impact of high discount rates on balance sheets.  
Moreover, there’s a massive difference between the U.S. 10-year yield being 5.55% and the real yield being 5.55%. Don’t move on from this distinction—it’s a major pitfall, as my bearded dream figure warned me 😒</p>

Let’s not mistake the positive gap between nominal GDP growth and Treasury yields as an indicator of macroeconomic health. The real issue lies in real yields, term premiums, primary deficits, and debt rollover costs. Growth may be strong, but sovereign duration risk can still be repriced simultaneously. GDP growth does not offset the impact of high discount rates on balance sheets.  
Moreover, there’s a massive difference between the U.S. 10-year yield being 5.55% and the real yield being 5.55%.

Let’s not mistake the positive gap between nominal GDP growth and Treasury yields as an indicator of macroeconomic health. The real issue lies in real yields, term premiums, primary deficits, and debt rollover costs. Growth may be strong, but sovereign duration risk can still be repriced simultaneously. GDP growth does not offset the impact of high discount rates on balance sheets. Moreover, there’s a massive difference between the U.S. 10-year yield being 5.55% and the real yield being 5.55%. Don’t move on from this distinction—it’s a major pitfall, as my bearded dream figure warned me 😒

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