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What do low interest rates mean for equity markets?

The last 30-40 years has seen a dramatic shift down in interest rates for much of the developed world. For example, the ten-year government bond yields in Australia and the US have declined from around 14 per cent in the early 80s to more recently lie somewhere not unadjacent to zero.

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This relentless shift down in rates has naturally had profound implications for bond prices which are tied to rates by some straightforward math that requires the price of a bond to equal the coupon divided by the yield.

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