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Further disruptions of major economies by the COVID-19 crisis,
including new shutdowns, were expected by a total of 42% of
respondents to the survey of more than 30 central bank reserve
managers.
Among non-COVID concerns affecting the global economy, trade
wars ranked as the top worry for the third year in a row, cited
by 81% of participants. Fear of a global economic slowdown and a
return of deflationary trends ranked second, flagged by 72% of
respondents.
But political developments in the U.S. emerged as a worry for
72% of participants, more than twice the percentage of those who
saw it as a key risk in the previous year.
Investors are preparing for the Nov. 3 presidential election
between President Donald Trump and former Vice President Joe
Biden. They're also focusing on what the outcome may mean for
the United States' relationship with China after the two
countries imposed tariffs on each other's goods.
For the second year running, low and negative yields in
fixed-income markets remained the biggest anxiety affecting
central bank FX reserves, excluding the coronavirus, with 69% of
respondents citing it as a headache.
Real, or inflation-adjusted, yields on U.S. 10-year Treasuries
plunged below zero this year amid the coronavirus pandemic,
joining Japanese, German and British equivalent debt that has
for much of the past decade given negative returns.
While the survey suggested the global dominance of the U.S.
dollar remained intact, the average share of dollar holdings
among all participants was 67%, down from 71% the year before.
The dollar and the Chinese yuan were the currencies most added
by participating sovereign institutions during the past year,
the survey found.
(Editing by Larry King)
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