The decisive choice for investors in the euro zone: Where will risk-free long-term interest rates be in five or seven years?

The question of the medium-term trajectory of euro risk-free long-term interest rates is decisive for investors in the euro zone. If they believe these interest rates will remain extremely low, they can without fear buy equities, real estate, private equity, leveraged loans and infrastructure bonds, as all these assets provide substantial risk premia . I f they, on the contrary, believe that risk-free long-term interest rates will rise (in 2007, the 10-year Bund was at 4.7% !), then there is an across-the-board bubble in these asset classes.