The tbill rate is used as a predictor of the equity premium in a number of papers.
Whilst there is not a general consensus about whether it is a significant predictor, it is still widely used.
I am wondering the theory of why the tbill rate could forecast stock returns?
Is it because this is the rate firms can lend at?
But I do find this to be unrealistic if so, could a WACC for each firm do a better job at forecasting firm-specific returns?