Bye bye, Goldilocks

The combination of moderately higher bond yields and increased volatility has significant implications for investors as it implies that the sweet spot in global equity and bond markets is behind us, says the writer.
The combination of moderately higher bond yields and increased volatility has significant implications for investors as it implies that the sweet spot in global equity and bond markets is behind us, says the writer.PHOTO: AGENCE FRANCE-PRESSE

Expect new era of market volatility with reflationary scenario likely to dominate

We are entering a new era for inflation and market volatility, and investors need to be prepared. The Goldilocks scenario of 2017 is giving way to a reflationary scenario this year.

As the name suggests, the effect of Goldilocks on global asset markets was extremely positive as a combination of low inflation and falling market volatility helped drive returns higher in recent years.

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A version of this article appeared in the print edition of The Sunday Times on April 08, 2018, with the headline 'Bye bye, Goldilocks'. Print Edition | Subscribe