Outlook for Investment Markets
The key features of the outlook are a reasonable, but regionally very variegated, outlook for global economic performance and the likelihood that cash rates and bond yields will remain lower, for longer, than previously expected, particularly in the eurozone and Japan. With bond yields unattractive, income-sensitive investment flows have been pushing up asset valuations across other asset classes and there may well be further volatility episodes as expensive valuations confront unexpected setbacks, especially as geopolitical risks are reasonably high. In New Zealand, election uncertainty has been resolved, the economy is still performing well and local assets will continue to benefit from the favourable business cycle.
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