A few years ago I asked around among finance and finance-adjacent friends about whether the interest rates on 30 or 50 year government bonds had implications about what the market or its participants believed regarding xrisk or transformative AI, but eventually became convinced that they do not.
As far as I can tell nobody is even particularly trying to predict 30+ years out. My impression is:
A typical marginal 30-year bond investor is betting that interest rates will be even lower in 5-10 years, and then they can sell their 30 year bond for a profit since it will have a higher locked-in interest rate than anything being issued then.
Lots of market actors have a regulatory obligation (e.g. bank capital requirements) to buy government bonds which drives the interest rate on such bonds down a lot, to the point that it can be significantly negative for long periods even when the market generally expects the economy to grow. Corporate bonds have less of this issue but are almost never issued for such long durations.
It’s true that the market clearly doesn’t believe in extremely short timelines (like real GDP either doubling or going to zero in the next 5-10 years). But I think it mostly doesn’t have beliefs about 30+ years out, or if it does their impacts on prices are swamped by its beliefs about nearer-term stuff.
A few years ago I asked around among finance and finance-adjacent friends about whether the interest rates on 30 or 50 year government bonds had implications about what the market or its participants believed regarding xrisk or transformative AI, but eventually became convinced that they do not.
As far as I can tell nobody is even particularly trying to predict 30+ years out. My impression is:
A typical marginal 30-year bond investor is betting that interest rates will be even lower in 5-10 years, and then they can sell their 30 year bond for a profit since it will have a higher locked-in interest rate than anything being issued then.
Lots of market actors have a regulatory obligation (e.g. bank capital requirements) to buy government bonds which drives the interest rate on such bonds down a lot, to the point that it can be significantly negative for long periods even when the market generally expects the economy to grow. Corporate bonds have less of this issue but are almost never issued for such long durations.
It’s true that the market clearly doesn’t believe in extremely short timelines (like real GDP either doubling or going to zero in the next 5-10 years). But I think it mostly doesn’t have beliefs about 30+ years out, or if it does their impacts on prices are swamped by its beliefs about nearer-term stuff.