'Zero interest rates aren't normal': Adani Group CFO counters Uday Kotak on US bond yields

Adani Group's Chief Financial Officer Jugeshinder Singh on Thursday dismissed Kotak Bank founder Uday Kotak's warning over rising US Treasury yields. Singh argued that higher borrowing costs represent a return to historical norms rather than a financial crisis.

Earlier today, Kotak cautioned that surging US bond yields had become the "Achilles heel" of global finance. "Achilles heel for global finance is US bond yield. 10-year crossed 4.70% and 30-year 5.20%, despite Fed rates being on hold. The new Chair Kevin Warsh believes in smaller Fed balance sheet. That shrinks liquidity," the veteran banker said. 

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'PANIC... IS PURE COMEDY'

Singh, however, dismissed the concerns.

"Panic over a 4.70% Treasury yield is pure comedy," he wrote on X. "An entire generation of money managers got addicted to the 2008–2021 Fed liquidity drip. They think zero interest rates are normal. They aren't."

According to Singh, the prolonged era of easy money distorted capital allocation. "It was an artificial anomaly that subsidized lazy capital and lazy bankers."

'WE AREN'T IN A CRISIS'

Backing his argument with historical data, Singh said current US Treasury yields remain below long-term averages. "Look at the actual data. From 1990 to 2008—the most stable era of modern growth—the average 10-Year yield was 5.68% (median at ~5.35%)."

"We aren't in a crisis; we are returning to historical sanity. Capital finally has a cost again," he said. 

The CFO also said businesses dependent on prolonged monetary accommodation needed to adapt to the new environment. "If your business model requires the central bank to manipulate liquidity just for you to survive, you don't have a business—you have a charity case."

"Easy mode is over. Welcome back to reality," he said in his concluding remarks. 

YIELDS RISE AFTER FED PAUSE

The Federal Reserve left interest rates unchanged for a fifth consecutive meeting on Wednesday.

Fed Chair Kevin Warsh reiterated that the central bank remained committed to bringing inflation back to its 2% target. Despite the policy pause, US Treasury yields climbed during his remarks, with the 30-year yield touching 5.21%, its highest level since 2007. 

The benchmark 10-year yield rose to nearly 4.69%, approaching its highest level in over a year.