Financial markets expert Edward Chancellor has warned that central banks’ long-term injection of money has created a bubble in all financial investments. He calls this “everything bubble,” which is slowly deflating due to higher interest rates, posing high risks.
In recent years, Chancellor has been sounding the alarm about this bubble, attributing it to ultra-low to negative interest rates set by central banks. Despite recent increases in key interest rates by central banks, he is surprised at the resilience of the financial system in the face of these rate hikes. However, he cautions that historically, manipulating interest rates to low levels has always led to crises and catastrophes.
Chancellor believes that interest rates still have room to rise before reaching historical norms. He notes that the recent rate increases came from exceptionally low levels, with interest rates having been negative in many places not long ago. The consequences of higher interest rates are already being felt, particularly in sectors like real estate and banking.
Global debt has reached record levels, raising concerns about countries’ ability to service their debts if interest rates continue to rise. Chancellor predicts that governments will push for lower interest rates to ease the burden of their high debts. Geopolitical risks are also being underestimated in the current market environment, adding to the complexity of the situation.
Chancellor anticipates further economic and financial turbulence if the effects of higher interest rates persist. He points to the potential impact of rising inflation and geopolitical tensions on global markets. Despite recent market fluctuations, Chancellor sees opportunities for investors in areas such as inflation-linked bonds, value stocks, and emerging markets.
The bursting of the former bond bubble, exemplified by the sharp decline in some long-term bonds, signals a changing market environment. Chancellor expects inflation to continue rising, prompting shifts in investment strategies.
Overall, Chancellor emphasizes the importance of monitoring interest rates and understanding their impact on various asset classes in the current market landscape.
In conclusion, Edward Chancellor warns that central banks’ flood of money has created an “everything bubble” in financial investments that is slowly deflating due to higher interest rates posing high risks. Despite recent increases in key interest rates by central banks, he is surprised at
