There has been a surprising recovery on the stock markets since the beginning of the year.
(Photo: AP)
Frankfurt What happens when a good trillion dollars are sucked out of the capital market? The major US bank JP Morgan warns: “We remain cautious about risky assets”, meaning above all stocks, but bonds are also affected. Behind the Wall Street giant’s warning are the aftermath of the bitter dispute over the US debt limit.
Only shortly before the US government threatened to run out of money on June 5 did Republicans and the Democratic White House agree to raise the upper limit for US national debt. This averted the feared meltdown on the markets, a default by the world’s largest debtor, the USA. But the debt dispute will still have consequences.
For now, the US Treasury will flood the markets with a deluge of bonds to fill the empty coffers. This will further dry up the already dwindling liquidity on all markets due to the rapid change in monetary policy. JP Morgan analysts put this effect at $1.1 trillion.
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