What Do Elevated Long Yields Mean for M&A?
On balance, elevated long yields translate to muted M&A activity.
Private equity buyers will continue to use cash (and less debt) to fund acquisitions.
Companies will execute smaller acquisitions with smaller price tags rather than lever up at high rates.
Companies will buy back less stock - especially at elevated PE multiples.
The Fed will face pressure from the fiscal side and from corporate America to lower Fed Funds and to execute a QE program to lower rates along the yield curve. Thus, the next corporate bailout is coming in 2025.