Bank of England Raises Concerns Over Overvalued Tech Stocks and Global Asset Prices
The Bank of England has warned that valuations for U.S. technology stocks may be too high given the current macroeconomic backdrop and spike in interest rates. The central bank stated that stretched risky asset valuations increase the likelihood of a greater correction in prices if downside risks to growth materialize. This comes as many popular technology stocks trade at a sharp premium to the S&P 500, and credit spreads for U.S. Dollar-denominated high-yield and investment grade bonds are more compressed than their Euro or Sterling equivalents. While central banks generally avoid commenting on specific market prices, the Bank of England's warning highlights concerns about the potential vulnerability of U.S. tech stock valuations.