EUR/CHF, EUR/USD Flows: Telegraph: World risks fresh credit bubble, BIS Warns

Asset prices across the world have risen to heady levels not seen since the credit boom 5 years ago and may be losing touch with economic reality yet again, BIS has warned. BIS said "some asset prices appeared highly valued in a historical context relative to indicators of their riskiness" Yields on morgtage bonds have fallen to the lowest level ever recorded. Spreads on corporate debt have narrowed to the wafer thin margins of 2007, even though default rates are currently three times higher than they were then for junk bonds and twice as high for investment-grade companies.

"Unusually, equity and fixed income gains coincided with a weakening of the global economic outlook. In the past, falling growth forecasts have usually been associated with rising expected default rates and higher bond yields".