We believe that the diverging paths taken by the major central banks – the Fed and the Bank of England on the one hand and the ECB and the Bank of Japan on the other – will increasingly affect the performances of the equity and bond markets.

## Corrections are a common phenomenon in equity markets

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## Central banks take center stage… again
Over the past few weeks, and not for the first time, central banks have played a prominent role in financial and economic news. Although generally predicted, the Federal Reserve reached a milestone by terminating the purchasing of government bonds (QE) after more than five years. Although it is the subject of heated debate, we belong to the camp that believes the policy to have been a success. The US economy has emerged from the crisis significantly stronger than its main counterparts.

The Japanese central bank surprised analysts by substantially expanding its QE programme, in an attempt to convince the market of its determination to get inflation onto a structurally higher path.

The ECB is the only major central bank which has not yet resorted to sovereign QE (buying government bonds), in spite of the extremely low economic growth and inflation. Mario Draghi again attempted to convince the markets that the central bank will do everything in its power to get growth and inflation on a structurally higher path.

We expect the central bank to be unable to avoid sovereign QE, in spite of the fierce resistance from central bankers and politicians in the core Eurozone countries. Yet this is unlikely to happen before the first quarter of 2015. We retain our positive outlook for equities, real estate and spread products.