First published: ft.com, 28/05/2015
Market anomalies abound as debt levels rise and interest rates stagnate
Speculative euphoria, even when encouraged by central banks, is defined by the way it ends — not with a whimper but with a bang. In this context, the so-called Bund “tantrum” may be no more than a hiccup in the context of deeply anomalous financial market conditions.
Investors are still chasing low or negative yields in bond markets, fairly or fully valued equity markets, and rising property markets. Yet, it seems increasingly that, long-term investors aside, they are playing a greater fool game.
One of the biggest anomalies in global financial markets is the persistence of zero real, or inflation-adjusted, policy rates in most advanced economies and zero or negative real bond yields alongside a surge in the volume of public and private debt that shows no sign of subsiding….more: