Markets amplify global headwinds


Markets amplify global headwinds

This week was another eventful one for global markets. They fell at the start of the week on news that Trump was going to ramp up his trade war with China, rose when he decided not to and then plummeted again when weak data out of China and Germany stoked fears of a global recession. So far global GDP is slowing rather than falling, but markets worry that a slow to act Fed and a needlessly disruptive trade policy will make the difference between stalling and falling. Hence the extreme reaction to every bit of news in either direction.

Elsewhere, although not unrelated, markets have also begun fretting about negative interest rates. While they aren’t exactly new, the Swedish central bank has pursued a negative rate policy since 2015, they are uncommon. With a possible recession on the way and most interest rates at or near zero already, we might see a much wider adoption. How effective they’ll be is still unknown, however, while the central bank might be willing to directly pay people to borrow, the same is unlikely to be true of your mortgage lender.

Read what the team at FE consider to be significant over the current week.