No sign of declining demand for equities or real estate – Natixis

In the past, rising interest rates held back asset prices in OECD countries. But monetary policy now remains expansionary throughout the expansion period. What will contain the rise in asset prices if it is no longer monetary policy? An “exogenous” crisis and / or a drop in demand for an asset as soon as its price becomes too high, according to Natixis analysts.

What mechanisms can then stem the rise in asset prices today?

“An exogenous crisis, not linked to an economic or financial mechanism (geopolitical crisis, public health crisis); A drop in demand for assets as soon as their prices become too high: if stock prices are abnormally high, savers will turn away from equities and stock prices will fall; if house prices are abnormally high, households will stop buying a home.

Are there any signs of declining demand for expensive assets today?

“Are there now signs of this dynamic where even though interest rates remain low, asset prices stop rising due to lower demand for assets?” This is clearly not the case now: asset prices continue to rise and demand for shares is strong, knowing that in the United States this takes the form of share buybacks by companies.

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