R* in the Post-Pandemic Economy

The stunning sell-off in bond markets in recent weeks is a material reaction to investor concerns about what follows the end of years of ultra-low interest rates. Part of the answer lies with how the level of R*, or real equilibrium interest rates, has changed.

This isn’t just academic theorising; as we show in our in-depth new analysis, the structural forces that weighed on interest rates over the past two decades have faded, while powerful new forces are likely to push them higher in the coming years.

The net result is a global economy of higher real equilibrium rates. But how much higher, and what will that mean for monetary policymaking through the end of this decade? And how will this shape returns across asset classes, from bonds and equities to commodities and real estate?

Get our guide to the key takeaways from our analysis to find out. In this report you'll learn:

• How forces ranging from demographic change to AI to the green transition will shape the global economy in the coming decade;

• How central bank behaviour will change in an era of higher inflation and higher rates;

• How an era of higher risk-free rates will overturn long-held assumptions about financial market returns.