More Volatility, and the Prospects of Zero Interest Rates
The dog days of August have been punctuated by renewed volatility in global financial markets as investors worry about slowing growth in China; recessions in Japan, Germany and Italy; and escalation in the U.S.-China trade war. Concerns about recession in the U.S. have resurfaced and policymakers are scrambling. The risks to U.S. and global growth, described in the Longbrake letter at the start of this year, remain. Some have worsened considerably. Will monetary policy come to the rescue once again? In this month’s letter, Maryland Smith’s Bill Longbrake explains why long-term interest rates in the U.S. could be headed to zero in coming months – contrary to the expectations of most prognosticators.