The volatility on the capital markets has increased significantly. This is particularly evident when looking at momentum strategies, such as for technology equities. Despite equity prices declines due to risk increases, it is noteworthy to mention that risk-free government bonds did not show any significant declines in returns.
A number of important leading indicators point to a gradual weakening of the real global economic growth. However, the level remains good, i.e. it is expected to be above potential value in the long term.
The development of inflation is important. As long as it remains low in the developed economies, central banks have the leeway to pause the cycle of interest rate hikes in the event of a drastic tightening of the financial environment. This applies in particular to the US central bank.
Development of bond yields of US- and EUR-Government-Bonds and EUR-Corporate-Bonds Investment-Grade (10/2013-10/2018)
Development of bond yields of European High-Yield-Bonds compared with global High-Yield-Bonds and Emerging-Markets-Corporate-Bonds (10/2013-10/2018)
The development of historic yields is not a reliable indicator for future developments of a specific asset category or asset class. The charts above do not include any fees or costs.
Ratio-Overview (more information at www.erste-am.com)
Prognoses are no reliable indicator for future performance.