Interest rates
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Lord Rothschild.
“The six months under review have seen central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world. We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30 percent of global government debt at negative yields, combined with quantitative easing on a massive scale,” Rothschild writes in the company's semi-annual financial report.
The banker notes this policy has led to a rapid growth of stock markets – US stocks have grown threefold since 2008 – with investments growing and volatility remaining low.
However, the real sector of economy didn’t enjoy such a profit, as “growth remains anemic, with weak demand and deflation in many parts of the developed world,” according to Rothschild.
Janus Capital has estimated that global yields are the lowest in 500 years, and the total amount of such bonds is $10 trillion. The investment group’s lead portfolio manager, Bill Gross, is calling it a “supernova that will explode one day.”
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