The seven+ year bull market in US equities, which was mostly propelled by the high, Fed induced, equity risk premium, massive financial engineering, and innovation in fracking, is beginning to show signs of cracking. Please click here to continue reading.
In a paper published, in early 2015, by the Bank for International Settlements the authors successfully demonstrate that, while global banks are deleveraging, and reducing their US dollar credit to non-US borrowers, the Federal Reserve’s attempts at compressing the term premium, via its portfolio rebalancing channel, has pushed global bond investors away from low yielding US Treasuries and into higher yielding US dollar bonds issued by non-financials outside the US, more than offsetting the slowing credit growth of banks. Please click here to continue reading.
Here’s a great set of charts published by the Reserve Bank of Australia. Please click here for the chart pack: RBA CHART PACK – APRIL 2016