Probability of recession is rising but corporates remain healthy

ON ASSET ALLOCATION

Santander's Toby Vaughan says several indicators are giving buy signals despite recent market volatility.

It has been an extreme environment for financial markets in recent weeks with traditional risk assets moving well into the correction phase and a short list of markets falling over 20% – bear market territory. Meanwhile, traditional safe haven assets have swiftly moved up to new extremes. So, why has this happened and is it a big over reaction? The first part is explainable and, from our perspective, the jury is out regarding the latter. Technicals may drive a short-term relief rally, but an improvement in the cycle is required for this to become sustainable. Significantly more clarit...