The FTSE all-share (excluding investment trusts) is down just over 5% this week and year-to-date, but still some 5% above the low point of 3,216 reached mid-October.
In contrast, the yield for 10-year UK Government bonds of 1.86% is at its lowest point this year and down significantly from 3.03% at the start of this year.
It would appear that equity markets are now converging with fixed-income markets by pricing in a gloomier economic outlook.
The video below has the great merit of explaining very clearly and cleverly the impact of quantitative easing on both equity and fixed-income markets, covering key regions globally.
One thing is certain: uncertainty remains, hence the recent spike in volatility.
Source: David McWilliams: Europe’s QE quandry from Woodford Investment Management LLP on Vimeo