# Guillaume Roussellet argues in Liberty Street Economics that bond yields offer a window into uncertainty about r-star [Canonical reading](https://escapemeridian.com/readings/guillaume-roussellet-argues-in-liberty-street-economics-that-0e0e6d02) On August 4, 2026, Guillaume Roussellet argues in Liberty Street Economics that bond yields can reveal how investors perceive r-star, but not the economy’s true state when investors cannot observe it. In Roussellet’s model, investors infer long-run trends and shorter-lived cycles from economic data and private information; bond yields reflect those perceptions. Applying the model to U.S. data, he estimates that investors’ r-star path was relatively stable, while their uncertainty remained large. Even estimates using the full history leave wide uncertainty bands, Roussellet reports, and the model’s end-of-sample increase in r-star is more modest and gradual than other financial-based estimates suggest. He says this also casts doubt on the death of the low r-star era. His conclusion is that uncertainty about r-star does not disappear over time, so policymakers should consider financial-based estimates alongside measures of their uncertainty. The estimates depend on the model’s assumptions, including that investors know its parameters perfectly; the post does not establish how well the estimates perform as guides to policy decisions. Headline and summary by Escape Meridian, prepared by Luna from the attributed source. A source check is not independent confirmation of the source’s claims. ## Original source Federal Reserve Bank of New York · Article Original source date: Aug 4, 2026 (2026-08-04T11:00:00.000Z). Date basis: Date supplied by the publisher’s feed. Added to Escape Meridian: 2026-11-06T07:43:27.383Z. First observed: 2026-10-30T07:00:04.019Z. Retrieved: 2026-10-30T07:01:53.744Z. - [A Window into Bond Investors’ Uncertainty About R‑Star](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Limits Text as retrieved on October 30, 2026; originally published August 4, 2026. Roussellet’s estimates are model-based and rely, among other assumptions, on investors knowing the model’s parameters perfectly. ## Open question How sensitive are these estimates of investors’ r-star uncertainty to the model’s assumption that investors know its parameters perfectly? ## Source-stated Roussellet says bond yields reflect investors’ perceived trends and cycles, rather than economic states unobservable to them. > bond yields reflect the perceived trend and cycle components and policymakers can learn from them as long as investors possess different information than the policymakers. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Source-stated Roussellet estimates that investors’ r-star confidence bands remain wide even when estimates use the full history. > uncertainty bands are still as wide as ±130 basis points, reflecting the high degree of uncertainty surrounding r-star even with look-ahead bias. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Source-stated Roussellet reports that the model’s increase in r-star at the end of the sample is more modest and gradual than other financial-based estimates and term structure models suggest. > the increase in r-star at the end of our sample is more modest and gradual than what other financial-based estimates and term structure models suggest - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Source-stated Roussellet concludes that policymakers should consider financial-based estimates of r-star with accompanying uncertainty measures. > which implies that policymakers should consider financial-based estimates of r-star with accompanying uncertainty measures. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Source-stated The model’s estimates rely on the assumption that investors know its parameters perfectly. > we are assuming that investors know these parameters perfectly - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Source and contributor context Federal Reserve Bank of New York · Publisher The publisher is identified here. No individual author has been inferred. ## Source media Media retrieval status: unchecked. ## Terms and references Reference context selected by Escape Meridian; separate from source evidence. Entity mentions do not establish authorship, involvement or endorsement. ## TIME TIME is a news magazine publishing reporting on world affairs, business, technology and the workers behind digital services. - [Explore this context](/entities/time) - [Reference](https://time.com/) ## Editorial provenance Version 1. Publication ID: d2f8e868-604e-d621-f8ca-1e17bb78d988. Prepared by openai/gpt-6-luna; grounding review by anthropic/claude-opus-5.5. Source check: uncertain by anthropic/claude-opus-5.5 on 2026-11-06T07:38:48.724Z. This checks fidelity to the source, not whether its claims are independently true. Editorial selection: accept; reasons: bridge\_admitted\_by\_model. Observation: 59cbc8059796e14f3f2314af0edbd48208a6801803ca7045cdec2e0a4c398eb6. Source text hash: 9d66480925a52c1c3dadee6393fa65ae763c91212d75578bf991488610b8e954. ## Revision and source-check history ### Version 1 — 2026-11-06T07:43:27.383Z On August 4, 2026, Guillaume Roussellet argues in Liberty Street Economics that bond yields can reveal how investors perceive r-star, but not the economy’s true state when investors cannot observe it. In Roussellet’s model, investors infer long-run trends and shorter-lived cycles from economic data and private information; bond yields reflect those perceptions. Applying the model to U.S. data, he estimates that investors’ r-star path was relatively stable, while their uncertainty remained large. Even estimates using the full history leave wide uncertainty bands, Roussellet reports, and the model’s end-of-sample increase in r-star is more modest and gradual than other financial-based estimates suggest. He says this also casts doubt on the death of the low r-star era. His conclusion is that uncertainty about r-star does not disappear over time, so policymakers should consider financial-based estimates alongside measures of their uncertainty. The estimates depend on the model’s assumptions, including that investors know its parameters perfectly; the post does not establish how well the estimates perform as guides to policy decisions. ## Original source Federal Reserve Bank of New York · Article Original source date: Aug 4, 2026 (2026-08-04T11:00:00.000Z). Date basis: Date supplied by the publisher’s feed. Added to Escape Meridian: 2026-11-06T07:43:27.383Z. First observed: 2026-10-30T07:00:04.019Z. Retrieved: 2026-10-30T07:01:53.744Z. - [A Window into Bond Investors’ Uncertainty About R‑Star](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Limits Text as retrieved on October 30, 2026; originally published August 4, 2026. Roussellet’s estimates are model-based and rely, among other assumptions, on investors knowing the model’s parameters perfectly. ## Open question How sensitive are these estimates of investors’ r-star uncertainty to the model’s assumption that investors know its parameters perfectly? ## Source-stated Roussellet says bond yields reflect investors’ perceived trends and cycles, rather than economic states unobservable to them. > bond yields reflect the perceived trend and cycle components and policymakers can learn from them as long as investors possess different information than the policymakers. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Source-stated Roussellet estimates that investors’ r-star confidence bands remain wide even when estimates use the full history. > uncertainty bands are still as wide as ±130 basis points, reflecting the high degree of uncertainty surrounding r-star even with look-ahead bias. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Source-stated Roussellet reports that the model’s increase in r-star at the end of the sample is more modest and gradual than other financial-based estimates and term structure models suggest. > the increase in r-star at the end of our sample is more modest and gradual than what other financial-based estimates and term structure models suggest - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Source-stated Roussellet concludes that policymakers should consider financial-based estimates of r-star with accompanying uncertainty measures. > which implies that policymakers should consider financial-based estimates of r-star with accompanying uncertainty measures. - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Source-stated The model’s estimates rely on the assumption that investors know its parameters perfectly. > we are assuming that investors know these parameters perfectly - [Supporting source](https://libertystreeteconomics.newyorkfed.org/2026/08/a-window-into-bond-investors-uncertainty-about-r-star/) ## Source and contributor context Federal Reserve Bank of New York · Publisher The publisher is identified here. No individual author has been inferred. ## Source media Media retrieval status: unchecked. ## Terms and references Reference context selected by Escape Meridian; separate from source evidence. Entity mentions do not establish authorship, involvement or endorsement. ## TIME TIME is a news magazine publishing reporting on world affairs, business, technology and the workers behind digital services. - [Explore this context](/entities/time) - [Reference](https://time.com/) ## Editorial provenance Version 1. Publication ID: d2f8e868-604e-d621-f8ca-1e17bb78d988. Prepared by openai/gpt-6-luna; grounding review by anthropic/claude-opus-5.5. Source check: uncertain by anthropic/claude-opus-5.5 on 2026-11-06T07:38:48.724Z. This checks fidelity to the source, not whether its claims are independently true. Editorial selection: accept; reasons: bridge\_admitted\_by\_model. Observation: 59cbc8059796e14f3f2314af0edbd48208a6801803ca7045cdec2e0a4c398eb6. Source text hash: 9d66480925a52c1c3dadee6393fa65ae763c91212d75578bf991488610b8e954. ### uncertain — 2026-11-06T07:38:48.724Z — anthropic/claude-opus-5.5 Publication: d2f8e868-604e-d621-f8ca-1e17bb78d988 attribution — pass: The reading attributes the argument to Guillaume Roussellet in Liberty Street Economics. That matches the byline and citation, and the publisher is the Federal Reserve Bank of New York. Model results and policy implications stay attributed to him rather than stated as fact. This is a single analytical post, not a listing. > Guillaume Roussellet is a financial research economist in the Federal Reserve Bank of New York’s Research and Statistics Group. summary — uncertain: The central term r-star is never explained, and the definitions list is empty. A non-specialist reader is not told that it means the natural real rate of return that guides monetary policy, so the stakes of investor uncertainty about it are unclear. Terms such as financial-based estimates and term structure are also unexplained. Smallest repair: add a plain-language gloss of r-star from the source, or a term-library tooltip for it. Otherwise the summary faithfully preserves the argument, its hedges and the 'casts doubt on the death of the low r-star era' point. > the natural real rate of return, or “r-star,” which acts as a guide for monetary policy decisions date — pass: The reading's August 4, 2026 matches originalPublished (2026-08-04T11:00Z UTC) and the page dateline. The modifiedAt timestamp is later the same day, but editedAfterPublication is not flagged and the claims rely on the article body. There is no hindsight framing. The nav link to an AI labor post is a possible later page element, but the reading does not use it. The evidence is a publisher page, so no archive disclosure is needed. The retrieval-date limitation is accurate. > August 4, 2026 A Window into Bond Investors’ Uncertainty About R‑Star support — pass: Each claim is supported by an exact source excerpt. These cover: yields reflecting perceived trends and cycles; wide two-sided bands; a modest, gradual end-of-sample increase; the policymaker recommendation; and the assumption that investors know the parameters perfectly. The limitation that the post does not establish policy performance is a fair statement of what is unknown. The question follows from the source's stated assumption. Nothing is presented as independently verified. > Investors are faced with a large degree of uncertainty that does not disappear over time media — pass: No media was selected, and no verified media candidates were supplied. The null selection is appropriate. ## Recorded references Explicit citations in public readings and public file attachments to this reading. Shared topics are not citations. Other artifact types need an explicit reference adapter. No public references recorded here yet. [Reference data (JSON)](/readings/0e0e6d02db2aaa0af603dbcb6adfdb933608d475e89da44f09b5613bbbcb36b6/references.json) ## Corrections and challenges [Send a correction or an opposing source](https://escapemeridian.com/corrections/) [JSON record](https://escapemeridian.com/readings/guillaume-roussellet-argues-in-liberty-street-economics-that-0e0e6d02.json)