Get ready for interest rate normalization to shape central bank balance sheets to more traditional levels, achieving mean reversion after a significant trend of magnitude towards accommodation that has been historic in nature. Goldman Sachs analysis didn’t use the exact words, but they did note with this new “neutral” central bank balance sheets will be larger than before the 2008 financial crisis, will hold more duration and, as a result the yield curve could flatten as a “neutral” stance is achieved. The report interestingly pointed to an additional tool in the Fed tool kit should it be needed. Goldman Sachs:…
Goldman Sachs: Watch For ECB Balance Sheet Normalization
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.
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