Messages From Financial Markets

Financial markets offer valuable insight into the health of the global economy. Although fallible, they provide useful signals on investor sentiment and on expectations for changes in valuations.

Here is our assessment of recent asset market developments.

Investors have been moving money from riskier, growth-dependent assets to safer, low return assets which cope better with weak or falling growth. Money flows demonstrate that major investors are, once again, fearful that growth may falter and that deflationary risks are rising. Economies and assets that are seen as most at risk are those in countries with fragile prospects or where growth prospects appear to have deteriorated the most.