Global markets risk more turmoil

THE UK is right now the biggest source of instability for global financial markets. But markets are also more generally tumultuous. Major centres all face significant policy challenges, but options are highly constrained. Still, perhaps hyper-nervous risk-off markets could be soothed.

The UK’s tumult is in a league of its own. The new government’s bungling and the ensuing further collapse in sterling and surge in gilt yields is a critical unhinging factor, impoverishing UK citizens – as if the exit from the European Union were not enough! The statements made on Monday (Sep 26) surely did not thread the needle.

In the US, the Federal Reserve doubled down on its tough anti-inflation message last week. Amid persistent elevated core inflation, the Fed left no doubt it is now a single mandate central bank, that it will run the risk of a hard landing if needed to wring inflation out and that rates will remain higher for longer.