The fourth quarter of the year started with heightened volatility and rising uncertainty and is likely to continue this way, despite some green shoots in the first part of October.
This has been a year when the world’s values changed in ways many people would have believed impossible. The Brexit vote was a vote for disintegration and isolation, rather than integration and cooperation. Hot on its heels came the election of Donald Trump as president of the United States.
Both votes prove that public opinion is turning away from the liberal values that seemed, only at the beginning of the year, to solidly anchor the Western world. What it is turning towards definitely looks like a not-so-liberal, not-so-tolerant version of democracy.
Oil prices have always had a big political component, but it seems that increasingly they also have a financial, speculative one. And if this means oil stays cheaper for longer, we may be in for a very strong economic boom.
As this year draws to a close, it’s time for a quick review of the issues that the readers of Marketmoving.info have found most interesting.
The equities rally seen on Friday and which continued Monday morning in Asia seems to have been caused by bargain-hunting following strong outflows over the previous week.
But it is on shaky ground, because the Fed is unlikely to extend its liquidity provisions, so volatility is on the rise.
Liquidity conditions are worsening, which means recent volatility in markets is likely to continue and even get worse, a monthly liquidity gauge compiled by investment advisory firm Cross Border Capital shows.
An indicator of market sentiment shows the bears gaining ground as the bulls did not manage to take the latest stock rally too far.
Inflation will almost certainly go up, despite fears expressed by some policymakers and analysts that the world’s major economies are headed for deflation, research by insurance and pensions provider Legal & General shows.
Oil prices have softened despite heightened geopolitical tensions, but there is a limit to how low they can go.