Global risk-taking binge is worrying central banks

Stock indexes from the U.S. to India are at records, and low sovereign bond yields have pushed funds into property seeking better returns.

The danger is that such risk-taking re-creates a backdrop similar to that preceding the global financial crisis a decade ago.

Historically low interest rates are warping markets. In August, some $17 trillion of global investment-grade debt, around a third of the total, had negative yields.

The spate of recent financial stability assessments began Nov. 15 with the Fed, which warned that low rates could encourage riskier behavior such as eroding lending standards.

The Riksbank chimed in too, saying it was monitoring excessive risk-taking and its analysts had been looking at the danger of markets seizing up. The Swedish central bank plans to end negative rates next month having tested that policy with mixed results.

Fear hasn’t infected financial markets, and the global economy is still growing, after all.

…

Article source: http://www.dailystar.com.lb//Business/International/2019/Nov-28/496405-global-risk-taking-binge-is-worrying-central-banks.ashx