Bubble talk gains traction as equities trend higher

Despite an increase in market chatter on the need to adjust the outlook for European central banks and the US, price dynamics for most financial markets have remained fairly muted of late.

Slightly more two-sided risk from Fed tapering and further easing by the European Central Bank (ECB) had a clear impact on currency markets (broad based USD strength). Equities continued to trend higher, bond yields and credit spreads moved sideways and commodities lost a bit more ground. Looking ahead to the next 12 to 18 months, reduced ‘shock' fear among investors, further normalisation of allocation stances and relative risk premiums remain likely. The latter is something that cannot be stressed enough in an environment where ‘bubble talk' - or at least increased concern over asse...