Economic growth forecasts around the world have been slashed, which would usually make investors cautious - but BIS found central banks' policies are so influential investors have abandoned the fundamentals when making decisions.
The Federal Reserve announced a new, open-ended round of quantitative easing (QE3), the bank of Japan extended its QE operations and the European Central Bank unveiled its outright monetary transactions (OMT) programme, standing ready to buy Spanish government bonds if the country requests a bailout.
"Significant longer-term [economic] risks remained, including the Eurozone crisis and those related to the subdued outlook for global economic growth," said the report.
"Given that scenario, some asset prices appeared highly valued in a historical context relative to indicators of their riskiness. Indeed, numerous bond investors said that they felt less well compensated for risk than in the past, but that they had little alternative with rates on many bank deposits close to zero and the supply of other low-risk investments in decline."