Will global market face replay of 1998 financial crisis?
Global markets are echoing the 1998 financial crisis, Bank of America warns.
Emerging markets are crumbling under a strong dollar while tech stocks advance amid optimism over the U.S. growth trajectory - two ingredients that might be the makings of an annus horribilis like the one seen two decades ago, according to the bank.
"U.S. decoupling, flattening yield curve, collapsing EM - all echoes of 20 years ago," strategists led by Michael Hartnett wrote in a recent note.
Tightening by policy makers in the early 1990s set the stage for the dollar’s ascent of as much as 25% in the three years leading to 1998. "Meanwhile, the yield curve inverted in June that year," Hartnett and team point out.
"At first blush, we’re in a similar tightening cycle today, with the gap between two- and 10-year yields hitting fresh cycle lows," Bloomberg writes.