The Financial Post reports in its Friday, May 22, edition that Canaccord Genuity analyst Martin Roberge believes higher bond yields will start to take a bite out of equities when they hit about 3 per cent on the United States 10-year Treasury. The Post's Jonathan Ratner writes in the Trading Desk column that is above the historical average, but the reason is that asset allocators require a higher-than-normal margin of safety in order to favour stocks over bonds this time around. Mr. Roberge says, "World central banks have little fire power left to face the next recession or financial crisis." Three per cent also happens to match investor behaviour concerning the equity risk premium (equity returns above the risk-free rate), where the peak of the previous business cycle becomes the floor of the next. Mr. Roberge's bond yield outlook is based on his expectation for the level of real GDP growth for the U.S. economy in the coming year to be 2.25 to 3 per cent. He admits there is no way to be sure about where bond yields will be a year from now, but he believes 3 per cent could be the choking point for stocks. He says, "This does not mean that the bull market stops at 3 per cent."