Markets. With his three decades of experience in the currency markets, Simon Derrick, has experienced many financial crises, and a lot of periods of euphoria. For the banker and british american facility BNY Mellon, no doubt, is currently experiencing the second phase. “It reigns a strange atmosphere, which makes me think of 1999 or 2007. The optimism that reigns in the markets is really troubling. “Clearly, we are in a period before the crisis.
The first central bank to lead the charge is the u.s. federal Reserve
He who defines himself as “eternally pessimistic” focuses its anxieties on the bond market. Since the late 1980s, the western world entered a period of structural decline of the interest rate : around 10 % three decades ago, 5 % in the early 2000s and almost 0 % since the financial crisis of 2008.
This has been almost two years that this movement is reversed. The first central bank to lead the charge is the u.s. federal Reserve. It has the force to increase its rate, it has managed to raise us rates to ten years. At the end of April, they have crossed the milestone of 3 %, causing a thrill worthy of the peaks of the highest. In Europe and in the United Kingdom, it is not there (0.8% in France), but the trend is the same.
In itself, this is a good sign. The growth west is strong, and interest rates get back to normal finally, after years of exceptional. It rewards the savers, who will benefit from a better performance.
As always, impossible to predict with precision the date of the fall
The problem is that this changes the whole balance of the financial markets. In particular, the equity markets suddenly appear largely overvalued. A justification remained at this level : – bond yields being very low, investors preferred to…