RISK assets are grinding higher and volatility is extraordinarily low. Nominal economic growth is subdued (but rising) and monetary stimulus still plentiful. What are the implications of the first post-crisis divergence in central bank strategy? And what does life after zero (rates) look like?
Valuations are becoming stretched across markets and investor complacency is high. Many asset owners hold similar investment views: long credit, long momentum and short emerging market risk. This sets markets up for more volatility - especially as the focus shifts from the end of US quantitative easing (QE) to worries about the timing and magnitude of US interest rate hikes. Easy monetary policies by central...