Bond-king Bill Gross labelled global central banks’ $12 Trillion balance sheets as ‘methadone’ for investors, as they continue to crave debt and low rates. Without it, he says the US economy would sink into recession. “A 2.45%, 10-year U.S. Treasury rests at 2.45% because the ECB and BOJ are buying $150 billion a month of their own bonds and much of that money then flows from 10 basis points JGB's and 45 basis point Bunds into 2.45% U.S. Treasuries. Without that financial methadone, both bond and stock markets worldwide would sink and produce a tantrum of significant proportions. I would venture a guess that without QE from the ECB and BOJ that 10-year U.S. Treasuries would rather quickly rise to 3.5% and the U.S. economy would sink into recession.” Read the full note: (VIEW LINK)
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