Where will the global economy land?

THE global economy is in flux. Financial markets provide ample evidence that they are finding it hard to gauge the way ahead.

A liquidity event in the US regional banking sector in the past weeks has been the catalyst for a dramatic repricing of the macro outlook and interest rates cycle. There is no escaping the extreme level of uncertainty over the spillovers from the Silicon Valley Bank’s (SVB) collapse, and the subsequent turmoil in US and European banking.

Last week, the bond and equity markets experienced significant volatility, with the Move index, which measures bond market volatility, registering a more pronounced reaction than the VIX index, which itself reached 30 per cent on Mar 13. Notably, the Move index has risen to its highest level since the global financial crisis, surpassing its pandemic peak.