Daily Note – Navigating Negative Rates

CT-GET-508169213Summary

  • Search for Yield may lead down a treacherous path
  • Central Banks install a parking meter!
  • United States: Data doesn’t justify the hysteria

Good Morning,

I was in London yesterday and there was a lot of talk about negative rates. There appears to have been a minimal amount of planning by central banks like the ECB for this policy – certainly less than for QE.

The FT has a very interesting article running the rule over central banks who have or could go negative and the implications. Those are pretty varied and wide-ranging. At a country level it obviously causes flows to go chasing yield. With the door closing on earning money from parking it at a central bank, the money has to find a home elsewhere.

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GlobalMacro360 Daily Note 19th February 2016

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