Michael Kao: Questions the foundational role of risk free rate in financial risk structure

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Michael Kao: Questions the foundational role of risk free rate in financial risk structure — Risk free rate role questioned by Kao

Michael Kao, CIO at Akadia Capital, questioned the traditional view that the risk free rate is the fundamental bottom layer of the financial risk structure in a post dated November 8, 2026.

In his comment, Kao reflected on his previous perception of the risk free rate and expressed surprise at rethinking its position within the broader framework of financial risks.

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Kao has recently highlighted that a path to lower interest rates could entail an economic and market downturn as yields revert to pre-GFC levels, according to a previous analysis. He also commented that a breakdown in the AI trade coincided with a bond rally during a strong CPI print, pointing to concerns over growth and debt as described in a separate note. These remarks form part of Kao's ongoing commentary on shifting market risks and interest rate dynamics.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.

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