Macro Waves
Macro Waves
BNP Paribas Economic Research
#03 - Market psychology during economic downturns
7 minutes Posted Feb 11, 2019 at 6:00 am.
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The psychology of a recession, Episode 3 - The stylised facts of a recession (considerable drop in equity prices, widening of the spread between corporate and government bonds) imply that during a slowdown, investors will focus their attention on the likelihood of entering a recession. The sensitivity to bad news increases, the investment horizon shortens and volatility rises, with a detrimental impact on growth.