Markets wrestle with reflation prospects
In the period under review, policy support and overall positive, if uneven, pandemic-related developments benefited risky-asset valuations but also drove long-term bond yields up. Against the background of loose financial conditions and continued monetary accommodation, some asset prices reacted strongly to the prospect of fiscal expansion. Equities extended gains and credit spreads tightened further, with cross-country and sectoral differences reflecting delays in some vaccination programmes. While short-term sovereign yields remained firmly anchored, rising market-based inflation expectations accompanied a steepening of the yield curve.
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The pandemic-related financial turmoil of March 2020
A year after the pandemic-induced financial turmoil of last March, BIS economists review some of the lessons on the functioning of non-bank financial intermediaries that were not apparent in the heat of the moment.
The views expressed here do not necessarily reflect the views of the BIS member central banks.