The IMF has a warning on volatility in global markets that’s ‘not for the faint-hearted’

Sunday, April 19, 2015
By Paul Martin


APR. 19, 2015

It’s been well telegraphed by the US Federal Reserve that they are looking to normalize monetary policy at some point this year. The question is, could it still spark a renewed bout market volatility, despite the best efforts of Fed officials?

The IMF look at this in their latest Global Financial Stability Report, in which they warn “markets could be increasingly susceptible to episodes in which liquidity suddenly vanishes and volatility spikes”.

Using the example of the US treasury “flash crash” of October 2014 and Swiss Franc peg removal in January this year – two events that created significant market volatility – they suggest that the moves seen across markets were “likely amplified by market makers’ withdrawal of liquidity support”.

The Rest…HERE

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