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mpc: 5 Equity price-earnings ratios (using a trailing average of corporate earnings) were still around their average levels since 1990, and above their longer-run historical averages. But the period since 1990 included a period of exceptional stock market strength. Together with the low level of bond yields and spreads (notably for emerging-market and high-yield corporate debt), that posed the question of whether financial assets were collectively becoming overvalued, implying a risk of a future correction and an adverse shock to wealth and the cost of capital. Market anecdote suggested that a `search for yield' was giving rise to increased activity in the markets for a wide range of fixed-income securities, driven in part by the need for some financial intermediaries to meet guaranteed nominal returns on some of their own liabilities. The US yield curve might also have been affected by the high demand for US Treasuries from official institutions in Asia. These points suggested that the risk of a sharper-than-expected change in yields at some stage was skewed to the upside, and hence the risk to asset prices skewed to the downside.