“When growth and inflation are primarily driven by aggregate supply, nominal bond returns tend to be positively correlated with growth, necessitating a higher term premium.”
Why does this lead to higher term premium and not lower?
Read the whole paragraph.
“In theory, assets earn a low (or negative) risk premium if they tend to perform well when the economy is weak.”
Here you have a situation where asset is performing well with growth -“positively correlated with growth” - and therefore a higher premium
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I must have missed that text, thank you Mikey!