Latest G10 Macro Rates Blog
With Shayne Dunlap, Co-Portfolio Manager
One of the biggest
side effects of $14 trn of QE/Balance sheet expansion by the Fed/BoE/ECB and BoJ since the GFC, has been asset price inflation. This has created immense
wealth for the lucky people who were long assets in various forms, such as housing or equities. Invariably this has increased the wealth divide to
extreme levels and a generation of asset winners who believe it was their investing genius that acquired this wealth, when largely it was just a by-product
of public policy. Not only those lucky individuals, but a large proportion of the investment industry may have fallen for the same self-deception.
The fact is the lowering of central bank rates on inflation targeting and QE programs, has allowed the UST 10Y (and many other key government bonds)
to rally since 1981.