Ten years since the global financial crisis, investors can find differing signals in the market. On the one hand, there are signs that economic growth is becoming less dependent on stimulus from central banks. On the other hand, valuations appear to be stretched for most asset classes. History suggests that average economic cycles are about 6 years long, but this year will mark the tenth year since the start of the recovery. We must keep in mind that recovery from a banking crisis normally take longer than other forms of financial crisis. Nevertheless, an economic downturn therefore might be expected in the not too distant future. Central banks are likely to become net sellers of bonds in 2019, as the exceptional post-crisis measures are phased out. Could that mark a turning point in the cycle? Or will some other event be a catalyst?
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