Over the next halfcentury, the population of the world will age faster than during the past half-century as fertility rates decline and life expectancy rises. In Europe, the demographic profile is already tilted towards the higher age group and by 2050, this is projected to accelerate.
4 Again, consider the U.S. experience of the late 1990s. When the FOMC tightened in 1999 and early 2000, the trajectory of stock prices actually steepened, and equity premiums fell--perhaps because investors became more confident that good macroeconomic performance would be sustained. Since mid-2004, we have seen a marked decline in bond-term premiums, even as the funds rate has risen steadily.