Show Notes
Consumer sentiment has fallen to a four-month low while the 10-year Treasury yield sits at a 19-year high. The episode asks whether those two readings change the hurdle rates and WACC sitting in your capital plan, and argues they do. The position: a discount rate set in March, when the 10-year was near 4.2 percent against north of 4.9 percent now, can overstate present value on a 10-year cash flow by 15 to 20 percent.
You walk away with a trigger rule for rerunning numbers, the reason a Fed cut can coincide with a rising 10-year as it did in late 2024, and why weak University of Michigan sentiment hits both the numerator and the denominator, as seen in Target's cautious guidance.
0:00 Why your March discount rate is stale 0:54 Fed cuts do not lower the 10-year 1:47 Soft sentiment hits cash flows and discount rates 2:48 Annual WACC policy versus a trigger rule 3:57 Monday morning: rerun borderline capital projects
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