Let's do some calculations based on the total profits of American industrial companies: with a scale of $3.4 trillion, it implies that the annual dividends of the US stock market are approximately $2.6 trillion. Converted into dividend yield, that's just over 4%. Here's the interesting part—the yield on 30-year US Treasuries must move in tandem with this dividend yield.

Many people naturally assume that when the Federal Reserve cuts interest rates, it can suppress long-term bond yields. But the reality is quite the opposite. After a rate cut, market liquidity becomes abundant, and the total supply of funds increases. The most direct consequence is that the total dividends of US stocks rise accordingly. With more dividends, the dividend yield naturally goes up. Long-term bond yields? They are forced to rise along with them. So, blindly cutting rates actually serves little purpose.

Here's a heavily overlooked underlying logic: the true determinant of long-term bond yields is the nominal GDP growth rate, in other words, primarily driven by the dividend yield. The benchmark interest rate? That's just a surface factor. Short-term bond yields are also governed by the influence of nominal growth.

If you're still using the "benchmark rate determines long-term bond yields" theory to guide decisions, you're probably falling into a cognitive trap. This idea simply doesn't hold up from a fundamental perspective.