The total profit of US industrial enterprises is now $3.4 trillion. Based on this figure, the US stock dividends are approximately $2.6 trillion, with a dividend yield of just over 4%. The yield on 30-year US Treasury bonds should follow the dividend yield.

If the Federal Reserve cuts interest rates, the overall market liquidity will increase, which will lead to higher US stock dividends. As dividends rise, bond yields will naturally increase. Therefore, rate cuts do not lead to a decline in long-term bond yields; incorrect rate cuts have little effect.

Thus, long-term bond yields are determined by nominal GDP growth rate, which is in turn determined by the dividend yield, not by the benchmark interest rate. In fact, even short-term bond yields are greatly influenced by nominal GDP growth.

The idea that long-term bond yields are determined by the benchmark interest rate is undoubtedly a misconception and a flawed fundamental logic.