It seems the repayment of LTRO funds had quite a significant 'deleveraging' effect on the world's easy policy central bank balance sheet expansion. In USD terms, global central bank balance sheets have just experienced their biggest 4-week plunge since July 2009. Gold, like credit markets and European stocks, which have all underperformed US stocks, it appears merely discounted expectations of a drop in liquidity. We humbly suggest the momentum fueled, rotation-meme-driven, retail-is-in-now, US equity markets are due to meet their liquidity-maker sooner rather than later - if history is any guide. While, of course, the central banks' balance sheets are expected to expand (infinitely if they are to be believed), it would appear markets are stuck in the short-term for now (as opposed to discounting the future). Certainly the dramatic drop in central bank liquidity has had an effect in Europe as (led by credit) equity markets are well off their highs.
Global Central Bank balance sheets have seen their biggest 4-week plunge since July 2009...
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And it appears Gold was a better discounter for now...
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of course, credit markets have already traded to negative on the year and European stocks have plunged recently...
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Charts: Bloomberg