Global Macro Trends: Wisdom in Curiosity

KKR

Henry McVey

Research

28 Pages

KKR explores how negative interest rates, slowing global growth, and private market dynamics are reshaping asset allocation decisions. The paper challenges the idea that lower rates still stimulate growth, noting $16.8 trillion in negative-yielding debt may now be a drag, while private market returns could be overstated due to understated volatility.

Key Takeaways

Negative Rates Tipping Point: $16.8 trillion in negative-yielding debt has failed to boost nominal GDP, with European banks losing €318 billion in equity value since 2018.
Muted Return Outlook Ahead: Expected returns across asset classes are projected to decline over the next 5 years, with dispersion widening despite prior 12%+ annual returns in some segments.
Private Markets Volatility Mispriced: Fourth quartile private equity returns hover near 0%, while upside drives most volatility, masking true risk in traditional performance metrics.
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