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Takeaway: We are loudly reiterating our call that the unwind of ZIRP and QE will continue to deflate the easy money credit boom it fabricated.

Editor's Note: Curious about what will happen during the Great Unwinding of the Federal Reserve's zero interest rate policy (ZIRP)? Below is a brief excerpt from a research note written by Hedgeye Macro analyst Ben Ryan sent to institutional subscribers last week. To read the note in its entirety ping sales@hedgeye.com.

... And click here to join us on The Macro Show today with Hedgeye CEO Keith McCullough. It's free

The Unintended Consequences Of ZIRP On Commodities - money funds

According to Ryan: 

The excessive amount of capital in play in commodity industries is only beginning to decelerate and inflect.

Using a sample of 34 different producers in 4 different sub-sectors, commodity producer debt as a % of corporate credit outstanding has multiplied ~2.5x in 10 years. This group’s aggregate debt level is up ~5x in 10 years. The chart below shows the jump in commodity producer debt as a share of aggregate corporate debt levels.   

Click image below to enlarge 

The Unintended Consequences Of ZIRP On Commodities - commod leverage