Central Banks vs. Equity Markets: Is the Tail Wagging the Dog?

2019 Midyear Insights

    Facebook Twitter LinkedIn Email

By Cleo Chang - July 25, 2019

Central banks working together is not necessarily a case of the tail wagging the dog. Rather, it’s the fact that there exist deep-rooted relationships in the global markets that affect how investors evaluate risks and returns.

Globally speaking, central banks have been very accommodative for many years. However, that doesn’t prevent investors from reacting negatively when they hear a more hawkish tone. The European Central Bank, the Bank of Japan and the Federal Reserve have all experienced this when attempting to take their feet off the easing pedal. With Europe and Japan not being able to move rates up in a meaningful way, it may serve as an anchor for what the U.S. can do.

Watch my latest video to find out where I think rates are headed and how global central bank efforts, as well as market disparities, affect investor perceptions.

Transcript

    Facebook Twitter LinkedIn Email

Insights from our CIOs

Get additional insights in our latest Investment Outlook.

Discover More
  • Related Articles
  • More From Author

Recession Worries Sink Stocks

An inverted yield curve may signal trouble in the water. Despite the bond market’s warning, we still believe the U.S. economy may remain resilient.

Global Equities Take a Hit as U.S., China Trade Jabs

On Aug. 5, markets saw one of the largest one-day declines in recent memory. Multi-Asset Rich Weiss breaks down what it means for investors.

Fed Hopes Lower Rates Spark Higher Inflation

For the first time in more than 10 years, the Federal Reserve cut short-term interest rate—a move Fixed Income Co-CIO John Lovito says “provides a cushion for U.S. economic growth and inflation.”

    Central Banks vs. Equity Markets: Is the Tail Wagging the Dog?

    Deep-rooted relationships in global capital markets may affect how investors evaluate risk-adjusted returns.

    Alternative Investments Managers Welcome Volatility’s Return

    Volatility has made a comeback in equity markets. This quarter, Sr. VP & Head of Investment Solutions Cleo Chang explains how that benefits investors in the alternatives space.

    Finding Perspective Amid Turbulence

    Head of Investment Solutions Cleo Chang analyzes possible performance drivers in a volatile 2019 and market reactions to similar selloffs in the past.

      Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

      American Century Investments is not responsible for and does not endorse any comments, content, advertising, products, advice, opinions, recommendations or other materials on or available directly or via hyperlinks from Facebook, Twitter or any third-party website. Facebook, Twitter and LinkedIn are registered trademarks of their respective owners.