Survey Shows Soaring Neutral Rate's Impact on Treasuries and Nasdaq

The real neutral interest rate, which indicates the level at which the US economy is neither stimulated nor slowed, has doubled since the pandemic, causing concern among investors about buying bonds or stocks, according to a Bloomberg survey. Around 85% of respondents believe the real neutral rate has risen to around 100 basis points or higher, compared to pre-pandemic estimates of about 50 basis points. This suggests that the Federal Reserve may need to maintain tighter monetary policy for longer, potentially impacting the value of stocks and bonds. The survey also indicates that 10-year Treasury yields are expected to reach 5% by the end of the year, and a majority of respondents view both the S&P 500 and Nasdaq 100 as overvalued.