Basic economics entertained the possibility that if a government over stepped its spending boundaries it could engulf the credit markets and "crowd out" private borrowers. The huge fiscal outlays of the past 3 years provoked more than a few commentators to opine of this coming event. After a successful new cash refunding and the majority of this week's issuance done, "crowding in" appears to be the actual phenomenon.
Of course, QE and the ZIRP are exerting powerful mojo. Both of these policies are common characteristics of similar cycles so should not be treated as outliers. April and May have seen fairly robust corporate borrowing given the overall lower economic flight path. A host of Blue-Chip equity is available with decent T+ dividend yield pick up. Investors appear to us to be Crowding In. (Craftier writers have termed it "return free risk"-not sure who coined it)
There does seem to be a significant aversion to applying investment cash in this manner. More waiting room than lock box, if data were to improve or international developments calm, most would entertain other locales. And yet, this incredibly gratuitous situation casts off little more than a growth glimmer. Crowding In is occurring during a period of gargantuan monetary voodoo but economic suspended animation. More pox than policy. As Peter Gabriel sang in the 70's, "You gotta get in to get out."