Commentary
Most market participants have been surprised by the last six months. The total return of the U.S. Treasury Index was the worst since 1788 according to Deutsche Bank. Stocks closed June with one of the largest corrections since 2008. Bonds and equities are falling in unison driven by rate hikes and normalization of monetary policy. However, there’s no such real normalization.
The balance sheets of the main central banks have barely moved and remain at all-time highs according to Bloomberg. The European Central Bank continues to ignore the highest inflation rate in the eurozone since the early 1990s by keeping negative rates. The Federal Reserve rate hikes have been more aggressive, but it’s still injecting billions of dollars in the reverse repo market, and monetary aggregates remain excessive….