impressive exits
The second additional factor relates to money flows and the resulting effects on market liquidity.
According to the data collectedBank of America“Nearly $30 billion has been exited from individual equity and bond mutual funds and converted into cash. These and other indicators, such as the record high in options trading to hedge once morest equity declines, point to the potential for large asset reallocations that have pressured performance. Market regulator.
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The greater the pressure on market performance; Traders and investors became increasingly concerned regarding their inability to reposition their portfolios as required. The higher their inability to form their portfolios according to their whims; The risk of more of them exiting increased. This is particularly the case in fixed income, where much of the bonds now depend on the balance sheets of central banks.
As I detailed previously in my Bloomberg op-eds, I was already anticipating increased volatility and lower prices as markets went through the three major paradigm shifts. Developments during the past week point to the risk of further instability driven by decisions taken in the initial stage of change, complicating the already bumpy journey towards achieving new economic and financial balances, and this in turn is likely to lead to investment behavior errors.
