Financial services executives informally surveyed pointed to continued uncertainty in debt and equity markets in the medium term. This reflects underlying instability in the international outlook, lack of confidence and a lack of trust particularly at the institutional level. This will take time to sort out and there may well be impacts that affect our economy as a whole or private investment in infrastructure specifically. A colleague in Treasury suggested that caution is necessary and we will have difficult conditions in debt markets for a year or two yet. Further, stock markets may not have bottomed yet and volatility can be expected into the foreseeable future.
It was a prevailing view that equity markets would probably not “bottom out” until mid 2009 and debt markets would remain “tight” in the medium term.