BIS Quarterly Review, March 2002

Concerns about transparency cloud market optimism 

In the closing months of 2001, investors worldwide reversed the flight to quality and safety that had started in the summer and took positions in anticipation of an imminent economic recovery. The December 2001 issue of the BIS Quarterly Review noted the resilience of markets in the aftermath of the terrorist attacks of 11 September. In the ensuing weeks, resilience turned to optimism, and many of the major stock markets rallied in the closing months of the year, despite weak earnings reports and several prominent corporate defaults. Starting in early November, a similarly positive mood took hold in fixed income markets, resulting in narrower corporate credit spreads and steeper yield curves in the US dollar and euro markets. Equity and debt markets in emerging economies were also generally buoyant, with investors undeterred by problems in Argentina.

The views expressed here do not necessarily reflect the views of the BIS member central banks.