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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