William De Vijlder

Group Chief Economist BNP Paribas

Markets and financial investments

William De Vijlder analyses the relations between the economy and the markets (including bond, equity, commodity, capital and currency markets), investor behaviour, and their appetite for risk taking, in keeping with economic data and the level of uncertainty.

United States: Somnolent risk wakes up

During the current business cycle, rising bond yields have been accompanied by rising equity prices. From a historical perspective, the rise in equities in recent months has been abnormally strong, probably helped by the prospect of corporate tax cuts. Market developments this week show a high sensitivity to economic surprises which may end up fuelling economic uncertainty.

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QE, Dr. Pangloss, Dr. Jekyll, Mr Hyde

The ECB’s Financial Stability Review expresses concern about increased risk-taking behaviour in financial markets. Such behaviour increases the sensitivity of markets to unexpected developments in the economy. Accommodative monetary policy is a balancing act when growth is robust, inflation low and asset valuations rich.

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What happens after the peak?

The euro area Economic Sentiment Index is at its highest level since January 2001 and the growth outlook is robust. However, the historical experience of the ESI once the peak had been passed is quite diverse: weaker data not only reflect but also contribute to an increase in uncertainty.

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The dots drive the dollar

The dots drive the dollar

The behaviour of Wall Street hasn’t exactly been exciting in recent weeks. The big move came on Wednesday 20th. It was all about the dots, the indications given by the FOMC members about the expected path for the federal funds rate.

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Endogenous risks loom on the economic horizon

Replace ‘blue sky’ with ‘robust growth’ and ‘umbrellas’ with ‘economic policy instruments’ and you have a description of the global economic environment: robust growth but, if a downturn would come, very little manoeuvring room for fiscal and monetary policies to stimulate growth. All the more reason to keep a watchful eye on the horizon, and to prepare for clouds to appear.

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