It’s 64 days until the US Federal Reserve is expected to lift interest rates for the first time since June 29, 2006.
According to Bank of America-Merrill Lynch strategists Michael Hartnett, Brian Leung and Garrett Roche it’s the end of “peak liquidity”, something that has created “a humongous bull market in both equities and credit in the past 6 years”.
They have a compiled a list of what’s transpired in financial markets since 2009. It’s remarkable, and needs no further comment. It speaks for itself.
Here it is.
- Central banks now own over $22 trillion of financial assets, a figure that
exceeds the annual GDP of US & Japan
- Central banks have cut interest rates 577 times since Lehman, a rate cut
once every three trading days
- Central bank financial repression created $6 trillion of negatively-yielding
global government bonds earlier this year
- 45% of all government bonds in the world currently yield <1% (that’s $17.4 trillion of bond issues outstanding)
- US corporate high grade bond issuance as a percentage of GDP has doubled to
almost 30% since the introduction of ZIRP
- US small cap 5-year rolling returns hit 30-year highs (28%) in recent quarters
- The US equity bull market is now in the 3rd longest ever
- 83% of global equity markets are currently supported by zero rate policies