Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America
“The S&P 500 has essentially turned into a 36-year, zero-coupon bond,” she said. “If you look at the duration of the market today, it’s basically longer duration than it’s ever been. This is what scares me.”
The threat is that “any move higher in the cost of capital via interest rates, credit spreads, equity risk premia, that’s basically going to be a huge knock on the market relative to the sensitivity we’ve seen in the past,” she said.
—With assistance from Thyagaraju Adinarayan, Jan-Patrick Barnert, Abhishek Vishnoi and Anchalee Worrachate.
This article was provided by Bloomberg News.