“Repetition works, so is repetition”

Central banks seem to have convinced markets that inflation is temporary leading to another positive week for the HY and risky assets.  FED and ECB, like a broken record, are repeatedly confirming current policies. PEPP purchases in next quarter will run at a “significantly higher pace than during the first months of the year”.

In Thinking Fast and Slow, D. Kahneman talks about repetition:

“Anything that makes it easier for the associative machine [your brain] to run smoothly will also bias beliefs.” In other words, human brain is lazy and love the path that offer least resistance.

Even if evaluations are tight, we expect yield hunting to continue across markets -  implicitly confirmed by the graph below - as the ECB overdovished expectation keeping purchase programmes unchanged for the near future.

The put/call ratio is, in fact, once again down indicating elevated complacency among investors regarding a risk factors explaining the existing rally.