Market Overview

Bill Gross: If A Global Recession Happens, You Can Blame Central Banks

Share:
Bill Gross: If A Global Recession Happens, You Can Blame Central Banks

Who will take the blame for a global recession? The answer, at least according to famed bond investor Bill Gross is central banks across the world.

Gross, head of the $2.1 billion Janus Henderson Global Unconstrained Bond Fund, said in a letter to investors that central banks across the world have now shifted towards a tightening policy and raising interest rates. Doing so would merely increase the cost both consumers and corporations have to pay to finance their debt.

In the U.S. alone, households are sitting on nearly $15 billion worth of debt while businesses aren't that far behind at $13.7 trillion, CNBC noted. While many companies can afford the incremental cost of servicing debt, many more individuals and smaller companies simply cannot.

Meanwhile, it isn't a fluke that the three recessions observed in the U.S. in 1991, 2000 and 2007–2009 coincided with a flat yield curve between three-month Treasury bills and 10-year Treasuries.

"Today's highly levered domestic and global economies which have feasted on the easy monetary policies of recent years can likely not stand anywhere close to the flat yield curves witnessed in prior decades," he said. "Central bankers and indeed investors should vie additional tightening and 'normalizing' of short-term rates with caution."

Related Links:

Is Canada's Rate Hike A Cautionary Tale For Other Central Banks To Learn From?

A Layman's Guide To The Beige Book

Posted-In: Bill GrossAnalyst Color Forex Global Top Stories Economics Markets Media Best of Benzinga

 

Related Articles (SPY + SPX)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SNPSCFRAMaintains160.0
GRPNMorgan StanleyMaintains1.5
PPCCFRADowngrades30.0
HMSYCantor FitzgeraldReiterates33.0
FSLRCascendMaintains60.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com