As markets reopen in 2013 they have either fallen dramatically in the first few days on the failure of US politicians to resolve the fiscal cliff or are enjoying a relief rally on an eleventh-hour resolution.
Whichever outcome is playing out, and the hope is the latter, global markets will this year continue to be held hostage by new and lingering macro risks, extending investors’ risk-on/risk-off mentality.
“For the past three years, intermittent fears of US recession and European collapse have put markets into a risk-on/risk-off yo-yo,” says Peter Gunning, global chief investment officer of Russell Investments.
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