This is a particular instance of the “search for yield” that often accompanies a long period of very low interest rates. It may be associated with excessive credit creation and undue risktaking as investors seek higher returns, leading to the underpricing of risk and unsustainable increases in asset prices.
A number of other developments – the record issuance of highyield debt securities in the United States, the rebound of capital flows into emerging-market economies and the popularity of commodity exchange-traded funds in recent quarters – are consistent with this pattern. The influence of sustained low interest rates in major advanced economies on risk-taking behaviour is a powerful dynamic that bears watching.