The World Can't Afford Higher Interest Rates

That’s the end of QE tapering talk then? Not quite, but it should die down somewhat, given U.S. Fed Reserve conduit Jon Hilsenrath’s latest kiss-and-tell article in The Wall Street Journal. Thankfully, it might also stop all the blather about the U.S. and global economies recovering (they’re not) and this being the end of the bond bull market (premature). What most investors fail to realise is that developed markets, including the U.S., simply can’t afford a normalisation in interest rates: higher rates on government debt would crush their economies. This means QE tapering is highly unlikely and the current money printing experiment will only end when investors lose faith in government bonds. Where getting closer to that end game, but we’re not there yet.