G10 central banks to inject $2.8 trillion of liquidity in 2021 – Morgan Stanley

Morgan Stanley analysts foresee 2021 as another big year for liquidity injection and asset price inflation.

“On our projections, G10 central banks will inject another US$2.8 trillion of liquidity next year – just in their government bond purchases. That’s more than twice the amount of liquidity central banks injected in any year prior to the one drawing to a close,” Morgan Stanley analysts said, as noted by Zero Hedge.

As such, the dollar could see a continued sell-off in 2021. The dollar index, which tracks the greenback’s value against majors, is currently seen at 90.80, has declined by nearly 6% this year.

“The US dollar has further to fall against a host of G10 and emerging market currencies next year, and the safest investment of all – US Treasuries – will struggle to make ends meet,” the investment bank said.

Scarce assets such as gold could also benefit from the massive liquidity injections. The yellow metal rose to a record high of $2,075 in August and was last seen trading near $1,836 per ounce, representing a 21% year-to-date gain.