Despite the financial recovery efforts around the globe, Europe’s volatile markets continue to threaten instability, while Asian and emerging markets hold additional concerns. Here's seven areas of concern financial advisors and their clients need to watch over the coming months, according to U.K.-based Schroders.
1. Japan & Monetary Policy
“One of the key risks that I think people don’t talk about enough is that the BOJ [Bank of Japan] is actually successful,” Barrineau says. “It they produce inflation, nobody wants to buy JGBs [Japanese government bonds] and all of a sudden you’re in completely uncharted territory where yields rise in Japan.”
Rezek called Japan’s recent monetary-easing measures “quantitative easing on steroids.” Further, the country’s aggressive target for 2 percent inflation means it’s likely we’ll see the Yen dip lower.
“It takes a very small rise in yields in Japan to make what is a mathematically unsustainable picture over a decade become a mathematically unsustainable picture over two years or less,” Barrineau.