Another Hedge Fund Giant Bites the Macro Dust
With central banks easing again, it’s no surprise that Louis Bacon is returning capital to investors in some of his funds.
Returning money.
Photographer: Amanda Gordon/Bloomberg
For a while, it looked like the backdrop against which global financial markets operate was returning to normal. The Federal Reserve was raising interest rates, as was the Bank of England. The European Central Bank had turned off its monetary spigot, halting its bond-buying program. For 2018, the amount of global negative-yielding debt averaged about $7.5 trillion, down from more than $10 trillion in September 2017 and a peak of more than $12 trillion in mid-2016.
It didn’t last. With the world economy in a coordinated funk, central banks are once again easing monetary conditions. The Fed has cut borrowing costs three times this year. The ECB has driven its deposit rate even deeper into sub-zero territory, and has resumed bond purchases. Negative yielding debt is once again above $12 trillion, albeit down from a peak three months ago of $17 trillion. Financial repression is alive and kicking.