This suggests that we needn’t care too much about the fact that real yields have recently turned positive. It’s a faulty indicator.

But Mullarkey's exercise also implies to me that regime change is here, making all investment decisions harder. Since the Global Financial Crisis, if not before, we’ve been used to the idea that any increase in bond yields, or any increase in inflation expectations, is good because it means more activity in the economy, and less risk of a Japanified slump. Those assumptions are no longer operative. And that leads to another nasty consequence:

The Party at Club 60-40 Is Over
Much is riding on 60-40 funds; the jargon name for funds that mechanistically balance stocks and bonds. The classic allocation is 60% stocks and 40% bonds, which is how they got their name, even though many will tend to have a higher equity allocation than this. The most popular variant on the theme is the target-dated fund, which has become the investment management industry’s best attempt to replace the old-style defined-benefits pension, which few private sector companies want to offer. The idea is that savers are offered a fund with a target date for retirement, and asset allocation will be kept at appropriate levels according to how long there is until retirement. Younger people will automatically be given a higher weighting in equities. Each quarter there is a rebalancing to return to the favored asset allocation, which in effect means selling stocks and buying bonds after the stocks have risen. Over the last decade this has guaranteed continuing flows into bonds, despite their low yields. 

How important are they? Recent research by the Investment Company Institute and Employee Benefits Research Institute shows that such funds have become the backbone for retirement saving in the U.S. Much is riding on them:

Automatic asset allocation has been particularly useful in persuading younger people to sign up to pensions. In many ways, this replaces the old paternalistic model of defined-benefit plans, gently guiding people into sensible allocations: