Price of money rising despite loose ECB and late Fed
- Capital costs far too much already
- Junk yields have gone ballistic
- Yields up on the lowest investment grade bonds
- Global defaults hit 6-year high of $95bn
An excessive price of money tends to kill growth in the rest of the world, send markets lower and impact the US dollar and risk.
Here it's charted versus the DXY index. The excess rate follows Sinus-like progress from -50 to +50 while below/above causes reversals.
In other “divergence” it is currently completely maxed out.
Here's a look at the 12-month (1-yr) GDP weighted. Here, too, the price of money rising.
And in the credit space: CCC – junk has gone ballistic.
Even BAA – lowest investment grade keeps seeing rising yields.
Another divergence chart… EUR high yield vs Global High Yield.
– Edited by Clare MacCarthy
Steen Jakobsen is chief economist and CIO at Saxo Bank