J.P. Morgan’s 2nd quarter “Guide to the Markets” report shows total cash in some form of bank or similar accounts of $10.845 trillion as of March 31, 2014. Annual interest income from a six month CD on $100,000 has fallen from 5.24% in 2006 to 0.39% in 2013 – WOW!
Seems to me that in the event that interest rates begin to rise, plenty of the $10.485 trillion on the sidelines will be put to work in bonds, keeping a lid on how high interest rates can go. Unless, of course, companies begin pouring excess cash into M&A and individuals pour more into real estate.
Check out the full J.P. Morgan report here.