In the first half of 2023, financial markets experienced a sustained recovery, fueled by lower energy prices and expectations of a more accommodative approach to monetary policy. Adjusting to the new economic framework, characterized by higher long-term interest rates and inflation, they showed increased sensitivity to negative events. The collapse of several US regional banks raised concerns in the banking sector, causing a brief period of volatility.
Global risks associated with the ESMA (European Securities and Markets Authority) mandate remain high or very high. Going forward, markets will remain highly sensitive, especially in the face of possible deterioration of economic fundamentals and risks in financial institutions. Particular attention will be paid to public and private debt sustainability in the context of higher interest rates.
In this context, there is a significant risk of corrections, given the fragility of liquidity in the stock, bond and cryptocurrency markets. Volatility and inflation are rising, also creating short-term risks for consumers, particularly through losses from negative real yields.
https://www.esma.europa.eu/document/esma-report-trends-risks-and-vulnerabilities-no-2-2023