Here’s how Jefferies is responding to a world where everyone can earn 5% on cash

For more than a year, financial-market players struggled to envision how high U.S. interest rates would need to go to curb persistent inflation, leading to a drying-up of transaction activity. Now, the U.S. is settling into an environment of a roughly 5% risk-free rate, give or take half of a percentage point — the interest level which everyone can earn on their cash. That’s led to a thaw in the previously “frozen” capital formation that had buyers and sellers less willing to engage, according to Chief Executive Rich Handler and President Brian Friedman of Jefferies Financial Group JEF. Handler is one of Wall Street’s…