RBA Assistant Governor Brad Jones cautioned that global markets may be underestimating geopolitical risks and systemic fragmentation. At a conference today, he highlighted that risk premiums across major asset classes have fallen to “concerning lows,” suggesting investors are failing to fully price in potential shocks.
“We’re just surprised that there’s not a bit more reflected in spreads given what we observe,” Jones said, pointing to what he called “a confronting set of potential risks.”
Jones also drew attention to shifting dynamics in global reserve management, noting “emerging evidence of fragmentation” in how central banks allocate their assets. He said a distinct group of countries has driven the recent surge in official Gold holdings, reflecting a growing desire to diversify away from dollar- and euro-denominated assets amid heightened concerns about “risk of asset seizure sanctions”.
