Central Bank Statements Overwhelming Actual Fundamentals

Note: This section contains information in English only.
Source: Dukascopy Bank SA
While speculations on market over-sensitivity to central bank announcements have been working the minds of analysts for several years already, latest developments are said to have turned the page. The recent bond sell-off following ECB and Fed statements has proved worries to be on point, Claudio Borio, head of Bank for International Settlements (BIS) warned.  

Borio presented a review on the matter in September, characterizing markets as highly volatile and lacking actual representation of underlying asset risks. Noting how the Brexit vote came as a core shaker to markets truly reflective of a "remain" scenario, Borio made his point by questioning whether the quick market recovery from the plunge was indeed of fundamental nature. It surely seems that markets are more concerned about monetary policy and central bank reassurance than the fundamentals themselves. 

According to the review, policy mixes should become more balanced to create a more sustainable system that would reflect the underlying risks of assets more transparently. Overburdened central banks boosting prices with monetary policy instead of actual economic activity have caused real reason to doubt market drivers' reliability. The conclusion comes following years of loose monetary policy with low and even negative interest rates amplified by asset purchase programs pushing bond prices up.
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