What is the medium-term outlook for financial markets in light of the political uncertainties around the world ?

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Market View by Florian Späte, Senior Bond Strategist

Market View 06/10/2017

Financial markets have performed well in recent months. Therewith, they have shrugged off rising geopolitical tensions around North Korea along with political turmoil in the US and tensions in Catalonia.

Over the last weeks, long-dated government bond yields on both sides of the Atlantic have rebounded. Although the near-term outlook for yields is a bit more uncertain given the recent recovery, the way is paved towards higher yield levels in the medium term.

Although euro area IG corporate bond spreads are on a low level and the leeway for a further tightening is limited, we remain rather constructive in the short term. The fundamental situation remains benign and the ECB’s Corporate Sector Purchase Programme continues to support the market.

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