By invalidating actuarial calculations, central banks have given rise to major uncertainty

In the United States and the euro zone, interest rates (including risk premia) have become lower than growth across all asset classes with the exception of High Yield bonds. If growth in the income provided by an asset is higher than the interest rate with which its future income stream is discounted, actuarial calculations can no longer be made to define this asset’s fundamental value. To be sure, very low interest rates boost demand and borrower solvency. But one cannot forget that they give rise to major uncertainty over asset values. This uncertainty is negative.