The Fed's relief programs will drive a 'tipping point' and end by 2021, KKR's macro expert says

Joshua Roberts/Reuters

• The Federal Reserve's "liquidity spigot" will close by 2021 as the government faces a new challenge in its ballooning debt balance, Henry McVey, head of global macro, asset allocation, and balance sheet investments at KKR, said Friday.
• Bond vigilantes — investors who short government bonds to combat inflation risks — could return in droves if the US continues its massive borrowing.
• To ensure the US can continue easily selling bonds to raise cash, it will likely end its relief programs sooner than most expect, McVey said in an interview with Bloomberg TV.
• Tax hikes are also likely in the cards as demand sits lower for a prolonged period, he added.
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Investors hoping for years of asset purchases from the Federal Reserve are in for a rude awakening as soon as next year, Henry McVey, head of global macro, asset allocation, and balance sheet investments at KKR, said Friday.

The central bank has spent billions of dollars to support market functioning and pad the economy against the coronavirus pandemic. Markets responded in kind, soaring through recent months on fresh hopes for a sharp recovery. Yet experts are now bracing for when the Fed could unwind its facilities and how the US will pay for its colossal aid efforts.See the rest of the story at Business Insider

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• The European Union's $826 billion stimulus plan to battle the coronavirus is 'too small and too late,' analysts say
• Fed Chair Jerome Powell says the coronavirus recession has been a 'great increaser of income inequality' — with low-paid workers and women bearing the brunt of the fallout
• Unemployment will be higher in the US than in other advanced economies through 2021, Goldman says