Kames' McNeill: Central banks will revert to QE very quickly in the next downturn

Rising real interest rates a big risk

John McNeill, head of rates at Kames Capital, has said the biggest "real danger" for markets is not central banks reducing their $20trn balance sheets, but rises in real interest rates.

McNeill warned a spike in global real interest rates, which have been on a downward trend since the 1980s, would cause a repricing across all asset classes, not just fixed income. "In terms of asset prices, global real interest rates is the key factor," he said. "Real rates could pick up this year which would be the real danger for all markets." Once we reach the end of the business cycle and markets move downwards, the head of rates said the Federal Reserve would be forced to return to its quantitative easing (QE) programmes as central banks will not have interest rate levers like du...