Wall Street’s Risk Binge Turns ZIRP-Era Yield Theory on Its Head

To Wall Street’s old guard, it had seemed inevitable. Once bonds started offering decent payouts again, people would lose the taste for risk that flourished when rates were zero.

That’s not quite how it’s playing out. While Treasuries have done their part, with two-year notes offering around 5% for much of April, the predicted retreat from speculation has yet to materialize. Take the last five days, when Bitcoin rose 9%, stocks and commodities surged and a few social-media posts sent GameStop and AMC Entertainment higher in a reprisal of 2021’s meme frenzy.

Healthy as risk-free rates are, they’ve done ...