Global financial markets have continued to be choppy as investor sentiment has reacted to the twists and turns in US-China trade relations and to the flow of data on the outlook for the global economy.…

Global equities have continued to recover from previous losses, as investors have become less concerned about recession risks and damage to the world economy from U.S-China trade frictions. A consequence has been a global rise in bond yields as investors have felt less need to buy safe-haven assets as insurance against downside risks…

The past few weeks have been dominated by geopolitical uncertainty, particularly the prospect of a US-China trade war and its potential impact on global business activity: Equity markets have whipsawed as trade tensions have risen or receded. The other major development has been further declines in local and global interest rates to even lower levels....

Interest rates have fallen to ever lower levels, benefiting both bonds (through capital gains) and equities (through improved absolute and relative valuation). Most of the impetus has come from central banks trying to get inflation to the levels they would prefer, but some (including in New Zealand) has also been insurance against potential economic slowdown....

Cash and bond yields have dropped to new lows as central banks have sought to boost growth and inflation and as investors have sought safe assets like government bonds in a climate of high political risk from the US-China trade tensions. Lower yields have boosted the valuation attractiveness of equities, and income-oriented sectors like property and infrastructure have been in particularly high demand....