Gripped by fear, markets need time

Risk-off sentiment has dominated financial markets year-to-date, largely driven by concerns over the health of the global economy and doubts about central banks’ policies, especially negative interest rates.

Equities have taken a hammering. The FTSE All-World stock index fell into bear territory last week, having declined by more than 20% from last year’s peak.

Benchmark bond yields have declined by some 50 basis points year-to-date, with 10-year Japanese yields turning negative, German bund yields falling to 0.2%, while 10-year UK gilt yields hit a record low of 1.3%.