Are global markets overvalued?

(June 20): Globally, equity markets have remained remarkably resilient despite the recent increase in geopolitical risks and related uncertainties.

Notably, the US market — the key barometer for global investors — is near record highs, extending a rally that started in early 2009. Every correction since then has been short and shallow.

Furthermore, the Volatility Index (VIX), which measures the volatility for the Standard & Poor’s 500, is now at 20-year lows (see Chart 1). This suggests that market participants are either overly complacent or pricing in low volatility ahead.

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