Friday, May 03, 2013

The Great Rate Compression...

...nearing its final descent.  In three years this experiment will be memory.  The problems with exceedingly low G20 interest rates coupled with a SHORTAGE of quality assets to invest available funds has been extremely deflationary.  This was pirmarily counteracted by massive deficit spending on the other side of the ledger.

Now, the calls of Austerity are being heeded.

Economic activity lags official policy, so give this bout 6 months before the torches are at the proverbial gate.

Negative real rates.  The bar has certainly been lowered.

Yields on eurozone sovereign debt fall across the board in the wake of the ECB's rate cut as investors react to Mario Draghi's perceived willingness to cut the deposit rate below zero, something policymaker Ewald Nowotny dismissed as not a near-term option. Yields on French, Austrian, and Belgian bonds hit record lows as spreads against safe haven German bunds (BUND) compress in Italy and Spain.

No comments: