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Major repricing event underway in TradFi markets

In a high-interest rate environment, U.S. real estate and equities are not as desirable as they once were.

James Van Straten
Jun. 19, 2023 at 3:27 pm UTC
2 min read
Updated: Jun. 19, 2023 at 4:35 pm UTC

Quick Take

  • Since the Global Financial Crisis (GFC) in 2008, a zero-interest rate policy and quantitative easing as the norm for the past 15 years.
  • This policy has contributed to asset inflation, which is anticipated to reverse. The extent of this reversal, however, remains uncertain.
  • Both the equities and real estate sectors flourish in an environment of inexpensive credit. Yet, the incentives have shifted with treasury yields at the start of the yield curve now surpassing 5%.
  • Dylan LeClair, an analyst at Bitcoin Magazine, has circulated a chart demonstrating that the current yield of the U.S. three-month treasury rate is roughly equal to that of the S&P index yield and U.S. corporate bonds (below).
  • As treasury yields are globally recognized as the “risk-free” rate, the appeal of holding other assets is diminishing, especially when they all return approximately 5%.
  • Moreover, the average rental yield in the U.K. for real estate ranges from 5-7%. This falls below the Consumer Price Index (CPI) inflation rate and is less appealing as gilt yields begin to climb above 5%, rendering them a potentially more attractive investment option.
Rates: (Source: Bloomberg/FT)
Rates: (Source: Bloomberg/FT)
RegionAreaGross rental yield
East MidlandsCity of Nottingham6.49%
Boston District6.01%
Mansfield District6.00%
East of EnglandFenland District5.60%
City of Peterborough5.49%
Great Yarmouth District4.56%
LondonBarking and Dagenham5.12%
Newham4.87%
Bexley4.80%
North EastHartlepool7.64%
Middlesbrough7.61%
Sunderland7.61%
North WestBurnley7.92%
Liverpool7.02%
Hyndburn6.98%
South EastCity of Portsmouth5.60%
Gosport District5.54%
City of Southampton5.54%
South WestCity of Plymouth5.64%
Gloucester District5.45%
Swindon5.40%
WalesBlaenau Gwent7.02%
Merthyr Tudful6.54%
Rhondda Cynon Taf6.44%
West MidlandsCity of Stoke-on-Trent6.63%
Coventry District6.04%
Newcastle-under-Lyme district5.98%
Yorkshire and the HumberNorth East Lincolnshire6.72%
Barnsley District6.45%
City of Kingston upon Hull6.42%

Rental Yields (Source: Zoopla)

Analyst View profile
James Van Straten
James Van Straten
Former Lead Analyst CryptoSlate

James fervently appreciates data, technology, and trend-spotting. As a tech and liberty maximalist, he hails Bitcoin as the 21st century's paramount invention.

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