Central Bankers Score a Record for Investors, for Now

History will record last week as marking another record high in the S&P index for what, already, is one of the longest bull runs for U.S. stocks. What it won’t show, however, is that financial markets have become even more reliant on central banks whose ability to sustainably deliver on both economic and investor prosperity is being challenged by a growing set of ever more complex economic, geopolitical and policy factors. All this renders central banks more vulnerable to political attacks and possible interference with their highly prized operational autonomy.

Surging on the back of signs of additional liquidity stimulus from central banks, the S&P reached a new high on Thursday before a tiny (0.1 percentage point) easing on Friday. Stock investors were by no means the only ones having a good week. Holders of fixed-income securities gained from both lower yields on government bonds and a narrowing of risk spreads in emerging markets and on investment-grade and high-yield debt. At the same time, and highlighting the unusual combination of simultaneous price gains, gold reached a five-year high, oil erased all of its monthly price loss and, with a 3% surge Friday alone, Bitcoins closed the week above the psychologically important price $10,000.