European Central Bank

It's no secret that trillions in global QE and the descent into the NIRP twilight zone have done very little to resuscitate global growth and trade in the wake of the crisis. 

Indeed, eight years on and the world is mired in subpar growth and faces a global deflationary supply glut that's driven commodity prices to their lowest levels of the twenty-first century on the way to undercutting central bankers' collective efforts to jumpstart inflation and keep the entire world from becoming Japanified.

As a result of the rush to global NIRP, which now sees central banks and their sovereigns accounting for over 25% of global GDP, amounting to around $6 trillion in government bonds, trading with negative yields, a question has emerged: when will corporate bonds follow this govvie juggernaut and how soon until investors pay not government but companies to borrow?

That is the focal piece in today's note by our favorite DB credit strategist Jim Reid who muses as follows:

It certainly does feel like groundhog day today because while last week's near record oil surge is long forgotten, and one can debate the impact the result of last night's Iowa primary which saw Trump disappoint to an ascendant Ted Cruz while Hillary and Bernie were practically tied, one thing is certain: today's continued decline in crude, which has seen Brent and WTI both tumble by over 3% has once again pushed global stocks and US equity futures lower, offsetting the euphoria from last night's earnings beat by Google which made Alphabet the largest company in th

There will be two key themes for investors seeking to shake off the abysmal "as goes January" blues:

It didn't take much to fizzle Friday's Japan NIRP-driven euphoria, when first ugly Chinese manufacturing (and service) PMI data reminded the world just what the bull in the, well, China shop is...

... leading to a 1.8% drop on the first day of February after Chinese stocks slid 23% in January with the nation’s manufacturing sector faces strong galewind challenges as the government plans to reduce excess industrial capacity and unleash troubling mass unemployment, while a weakening currency is spurring capital outflows.