It’s the time of year to look back over the last 12 months, but one strategist reached back to the 19th century to describe what’s going on.
In 1898, Swedish economist Knut Wicksell said equilibrium was only attained if the marginal return on capital is the same as the cost of money, notes Kit Juckes, the London-based head of currency strategy for French bank Société Générale. (Here’s a nice summary of Wicksell’s views, from the St. Louis Federal Reserve.)
Fast-forward a bit, and Juckes points out that the yield on the U.S. 10-year Treasury has averaged 6.2% over the last 50 years. During that time period, nominal gross domestic product growth (real GDP growth plus inflation), also has averaged 6.2%.
That is, of course,