BayernLB Research Perspectives

Taking stock of the risks

The upswing continues to be on track and bond yields are rising moderately. Where the situation on the coronavirus front is progressively easing, risks are now threatening from other quarters.

Perspectives edition 2021/09 (2021/09/29)

Clear & concise

  • The economic recovery is set to lose some momentum but to last longer as a result;
  • Though inflation will spike further initially, inflation pressure should prove temporary;
  • Where Covid-19’s risk for the economy is waning, other risks are on the rise;
  • Rising bond yields have helped to resolve the interest-rate conundrum;
  • Though short-term corrections are likely, we remain constructive on risk assets.

Video: An espresso with Jürgen Michels


During the summer, the interest-rate conundrum partially resolved itself as a result of an updraft in longer-term yields once technical factors had dropped out of the equation. This process has been supported by the Fed’s widely-expected tapering announcement and by other central banks’ reflections about normalising their monetary-policy stance. With coronavirus-related restrictions gradually lifting, the global upswing is progressing and bonds yields are climbing moderately. The latest developments in China demonstrate, however, that there are further risks besides Covid-19 which could disrupt this trajectory.

Although the second coronavirus-ridden autumn in the northern hemisphere began with a rising tally of infections, health-care systems have not been overstrained in countries with high vaccination rates. Indeed, restrictions have even been further loosened in many places. Even though the risk of a renewed escalation has not gone away, the epidemiological situation will probably...

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