For 18 months, the hourly rate is $834 million, according to Bank of America analysts, that is how many central banks have spent purchasing bonds since the epidemic began, with the Fed alone investing $4 trillion. It’s a figure that reflects the enormous flood of cash that kept businesses viable amid lockdowns and fuelled the greatest stock market surge in a generation.
With central banks absorbing so much of the bond market and driving down borrowing rates, there is now over $16 trillion in debt with a negative yield. And it’s one of the reasons why money managers believe they have no choice but to keep purchasing equities. For investors, the key question is how much longer central banks can keep the liquidity spigots open.
The wild card might be the delta version. After the country went into a three-day lockdown, New Zealand’s central bank decided not to raise interest rates. However, as Bank of America stated, “investors have no fear of central banks.”
(Content Source- Business Standard; Image – Business Standard)