Initial alarm cast by the long shadow of Brexit and bad Italian loans has been replaced by equanimity in the markets
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One obvious reason for the ebbing resonance of market shocks is the easy money policies of central banks, that subdue both interest rates and market volatility.Testing the shock proof status of markets therefore requires a departure from the current playbook that has dominated finance in the wake of the financial crisis.Of the 160 fund managers surveyed by Bank of America Merrill Lynch this month, 39 per cent expect "helicopter money" in the next 12 months up."There's a clearly a push away from austerity towards fiscal stimulus and a Var shock is a risk here and could be evolving as we speak,'' says Chris Watling of Longview Economics.And we have felt the Var tremors before, notably during the summer of 2013 with the taper tantrum and then, from last April, when the 10-year German bund yield rose from just above zero per cent to near 1 per cent by early June.One can only hope that markets simply experience another tremor and not the big one.
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