Will cash returns ever reach zero again?
By Richard Woolnough - 16 January 2025
In order to take a dispassionate look at this important discussion, we will focus solely on current long-term market-implied forecasts and work from there. The best way to explore this is to plot the 30-year interest rate swap. This represents the market’s pricing of average short-term interest rates over the next 30 years. This is the average cash rate. At times, the short-term rate will be above the long-term rate when central banks are running a more restrictive monetary policy, and at others, it will…