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Central banks have provided extraordinary stimulus to the economy in recent years through low interest rates, asset purchases and even the rarely used ‘helicopter money’ via stimulus cheques in the US and other jurisdictions. 

Central banks have provided extraordinary stimulus to the economy in recent years through low interest rates, asset purchases and even the rarely used ‘helicopter money’ via stimulus cheques in the US and other jurisdictions. 

This has boosted almost all asset prices and may have broken down some of the traditional correlations between bonds and equities. 

Investors, therefore, have been finding it increasingly difficult to find assets that achieve their required return because all this liquidity has pushed up asset prices, making it an expensive time to be investing, and with the pandemic and political uncertainties, the risks associated with those assets most influenced by factors such as interest rate movements are elevated right now.  

Private sector financial assets have grown to levels that far surpass those of the pre-global financial crisis and dot-com periods, causing vast inflows into equities and other risk assets. Speculation is rife, evidenced by large increases in single stock option equity volumes and investments in assets like dogecoin (a cryptocurrency that started as a joke that has a $20.4bn (£14.9bn) market cap at the time of writing).



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