Markets left unnerved by China puzzle

In its twice-yearly economic outlook, published in June, the OECD noted that there were “a number of extraordinary risks” which could potentially have big effects on the world economy. 

It warned in particular about signs of excesses in financial markets stemming from the side-effects of ultra-expansionary monetary policies in recent years.

The OECD pointed to negative bond yields and very tight credit spreads, as suggesting an “extreme pricing” of this asset class. It noted that equity markets had reached record levels and challenging valuations in many countries. It warned that an abrupt correction of these excesses could disrupt financial markets and have considerable negative effects on the real economy.