More on what bond markets are telling us.
Equity markets head into the week with a rocky start following Jurgen Stark’s resignation from the European Central Bank (ECB) on Friday over differences in respect of the ECB’s Securities Markets Programme.
Looking back, when the financial system lost its capacity to function with the collapse of Lehman Brothers, the response by global policymakers was more or less immediate and forceful. In recognising the inherent deflationary tendency, the collective policy response was delivered with boldness, determination and leadership.
Today, not only are the developed economies close to tipping into recession but also the Eurozone’s sovereign debt crisis looks more intractable than ever. The stress in relation to bank funding apparent in interbank markets stems from a banking crisis that looks more critical by the day. Once again, the counterparty risk that robbed the financial system of its capacity to function is troubling markets. More >