The Bank for International Settlements warns of global shares being disconnected from rising concerns about government debt levels. Moody’s stripped the U.S. of triple A status, while France’s rating was cut over fiscal worries. Investors should watch for potential stress, as risky assets are vulnerable to market eruptions.

U.S. trade tariffs had a smaller impact than expected, with no evidence of global investors shifting away from U.S. assets. While some non-U.S. investors sold U.S. bonds and stocks in April, most flows reversed in May and June. Any significant portfolio shift from U.S. assets is likely to be gradual.

A new global survey by the BIS shows post-COVID spike in global prices has raised household inflation expectations, especially in countries with the biggest increases. Concerns arise about lasting effects of temporary inflation surges. Households generally support central bank independence.

BIS warns of a cooling real economy, particularly in the U.S. labor market, as stock market valuations approach dot.com bubble levels and corporate bond spreads tighten. Dollar movements do not align with interest rate differentials. Market conditions may unwind, requiring close monitoring.

Read more at Yahoo Finance: BIS warns of mounting disconnect between debt and stock markets