YahooFinance-Bloomberg/Liz Capo McCormick, Garfield Reynolds and Greg Ritchie/8-1-2022
“It’s hard to take the punch bowl away. Everyone has gotten so used to the Fed backstop. It’s hard to say if the market needs it or has just grown accustomed to it. I really wonder about the moral-hazard idea.” – Kevin McPartland, Greenwhich Associates
USAGOLD note: In this lengthy article, Bloomberg takes a deep dive into the potential repercussions from the withdrawal of long-term support in the global bond market. Money printing covered up excesses and a level of moral hazard that is only now beginning to be unwound. As we have mentioned several times on this page, the unwinding of leverage deployed in these markets could be the straw that breaks the camel’s back. “[I]t’s in the $23 trillion US Treasuries market,” reports Bloomberg, “where the dislocations are causing the most trouble, fueling angst from investors and regulators alike about what can be done to shore up this crucial global financial linchpin.”
