The often-repeated pattern in financial markets has been the periodic shift in risk attitudes, initiated by the state of the economy, among lenders and other asset holders. History instructs us that, during recoveries and booms, risk discounts erode as the level of optimism lowers the barriers to prudence.
However, economic recovery is expected to be uneven between advanced and emerging market economies. The path to recovery will depend on the reach of mass vaccination and the effectiveness of policy support.