These two data points — an exuberant foreign listing and a sober valuation warning from a senior regulatory figure — arrive against a backdrop that deserves more attention than equity markets are currently giving it: a yield curve and term-premium structure that is sending signals broadly consistent with the conditions that have preceded every significant financial dislocation since the 1980s.
The Term Premium: A Signal Markets Are Choosing to Ignore
The term premium — the extra yield investors demand to hold long-dated government bonds rather than rolling over short-term paper — has been climbing. After years of suppression by quantitative easing programmes across the Federal Reserve, European Central Bank, and Bank of Japan, the US 10-year term premium has re-emerged as a meaningful positive number. Recent estimates from the Federal Reserve Bank of New York's Adrian-Crump-Moench model have placed it at elevated levels not consistently seen in many years.