That's only true if investors think the 10% rates are permanent. Future interest rates are a time series not a single value, and I suspect most will use a lower rate in later years reflecting some mean reversion.
A 10% rate on a 30-year treasury, is for all intents, permanent.
Think of it this way - a person buys a 30-year bond yielding 10%. Then, for the next 30 years, no matter what happens to interest rates or prices, they will earn a 10% return on their original bond purchase, risk free.
Remember also that 30 years is approximately your adult working life, so a really long time that people tend to think of a “permanent”.
Is it truly permanent? No, but for purposes of discussion and financial planning, it’s close enough.
Think of it this way - a person buys a 30-year bond yielding 10%. Then, for the next 30 years, no matter what happens to interest rates or prices, they will earn a 10% return on their original bond purchase, risk free.
Remember also that 30 years is approximately your adult working life, so a really long time that people tend to think of a “permanent”.
Is it truly permanent? No, but for purposes of discussion and financial planning, it’s close enough.