Antti Ilmanen explores how yield curve shape reflects mean reverting interest rate expectations more than shifting term premia. He shows that markets and economists repeatedly expected rates to drift back toward historical norms, missing a long secular decline, and argues these errors mostly reflect slow learning about structural change rather than simple irrationality. The discussion contrasts bond investors’ contrarian rate expectations with equity investors’ tendency to extrapolate returns.

Date published: October 7, 2025