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JP Morgan's Nikolaos Panigirtzoglou put out a fascinating report last week, looking at supply and demand in the global bond market in 2014 (The graphs are worth viewing). Central-bank buying accounts for $1.6 trillion, more than half of the total demand for bonds in 2013. Next year, almost all the net demand for bonds is going to come from central-banks and the official sector so it really does matter when that demand is diminished. This large transfer of money between central-banks is slowing down, but it's going to take a while. In any case, there doesn't seem to be any conceivable way that the private sector could possibly be able to fund the still-substantial government deficits. As a result, I suspect that QE is likely going to be around for a while, just as a matter of mathematical necessity. The world's national deficits can't get funded any other way. (VIEW LINK)


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