Capital Markets: Observations & Insights
Party Without the Punch?
Interest Rate Tailwinds
• Global central banks are moving from monetary stimulus and quantitative easing (i.e., bond buying) to monetary tightening and fiscal stimulus (i.e., bond selling/issuance) • Inflation is rising as the economy is now operating above its potential (i.e., tight asset/labor utilization)
Central Bank Balance Sheets (U.S., ECB, BOJ)
16
30%
14
25%
Year-over-Year Change
12
20%
Central banks are ending extremely accommodative policy
10
15%
8
10%
$ Trillions
6
5%
4
0%
2
0
-5%
2011
2012
2013
2014
2015
2016
2017
2018E
2019E
Source: Evercore ISI as of March 2018.
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