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The Cycle of Central Bank Liquidity and Asset Prices
In each cycle, central banks have to inject more liquidity than the last cycle to keep the system afloat and prevent it from breaking down. This liquidity flows into asset prices, potentially leading to a surge in the S&P and a launch of the second up-legged commodities. As a result, the speaker expects bond yields to start increasing in 2025-2026, leading to higher bond prices. The cycle indicates a world that is ever more leveled, requiring continuous liquidity injection to maintain stability.