The cost of saving global economy: $834 mn an hour

Imagine spending $834 million an hour for 18 months. That’s how much central banks have spent buying bonds since the pandemic hit, according to Bank of America strategists, who estimate the Fed alone has put in $4 trillion.

It’s a statistic that speaks to the unprecedented wall of money that kept companies afloat during lockdowns and sparked the biggest stock market rally of a generation.

“Stimulus has caused immense inflation of Wall Street assets,” wrote strategists led by Michael Hartnett.

With central banks sucking up so much of the bond market and forcing down borrowing costs, there’s now more than $16 trillion in debt with a negative yield. And it’s part of the reason why money managers say they’ve got no alternative except to keep buying up stocks. For investors, the big question is how much longer can central banks keep the cash spigots flowing at full force.

The delta variant could be the wild card. In New Zealand, the central bank refrained from raising interest rates after the country entered a threeday lockdown. But as Bank of America pointed out: “Investors have zero fear of central banks.”