Financial markets turmoil and negative interest rates.
Global stocks are down 11.7% year-to-date in dollar terms and the yield on benchmark ten-year US Treasury bonds has hit a low of 1.66%. The turmoil in financial markets since the beginning of this year is partly attributable to investors' waning confidence in the effectiveness of central bank policy, and, in particular, that negative interest rate policies are exacerbating weaknesses in the banking sector. This is reducing the scope for a rally in equity markets, which have been overly reliant on the flow of cheap money from central banks.
The strong yen will pose a severe challenge to the Japanese government's reflationary programme.
While stock markets will remain sensitive to monetary policy, investors will perceive central banks as sources of volatility.
The European financials sell-off stems from concerns about their earnings and business models, as opposed to a full-blown liquidity crisis.
