Why Are Financial Markets Doing the Opposite of What Would Be Expected?written by Bella Palmer
For well over a year now a major correction in financial markets has been called in many quarters. Last summer those investing online were being urged to adjust their portfolios in preparation of a downturn after 8 years of growth. A year later and another big wedge of growth has been delivered. Tech stocks dropped in March and it looked like
Financial Times columnist Gillian Tett calls attention to a whole range of bizarre aberrations in financial markets currently apparent. Across asset classes, markets are doing the exact opposite of what they normally would under the circumstances. The question those of us investing online in ISA and SIPPs have to ask ourselves is, what does it mean?
Despite a rattling of
The US Federal Reserve is also not having to offer any premium to entice investors into longer term Treasuries instead of just rolling over short-term government bonds. JPMorgan recently calculated that the yield curve between short and long term debt has inverted for the first time since 2007. Currencies are also not strengthening as would be expected on interest rate hikes. US interest rates are increasing way ahead of those in Europe and
Despite interest rates being increased in countries such as Canada, the Netherlands and Denmark runaway house price growth in those countries is also continuing unabated. Gold has also dropped 5% in two months as geopolitical tensions increase.
There is no obvious parallel in history to so many anomalies in the
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