The yield on the benchmark R186 bond had drifted slightly weaker, from below 8.0 per cent to around 8.25 per cent, and money market yields had also drifted higher.
10 A second reason the term premium may be lower than in the past is the changing correlation between stock and bond returns, likely caused by changes in expected inflation outcomes. 11 While in the 1970s and 1980s stock and bond returns tended to be positively correlated, more recently the correlation has tended to be negative.