In this paper, BNY Mellon discusses overcrowded trades, market complacency despite risks below the surface, escalating geopolitical tensions and the threat of energy supply shocks. Furthermore, they point out the inflation and monetary policy expectations in the US. BNY Mellon sees capital flow in emerging markets, especially in the fragile five (South Africa, Russia, Brazil, Indonesia, Turkey). They see signs of accelerating defaults in low rated credit in the face of very tight spreads.
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