There’s always an abundance of click-bait headlines that float around whenever the market starts to decline, but this one caught my attention today:
World Economy At Risk Of Another Financial Crash, Says IMF
According to the article:
The world economy is at risk of another financial meltdown, following the failure of governments and regulators to push through all the reforms needed to protect the system from reckless behavior, the International Monetary Fund has warned.With global debt levels well above those at the time of the last crash in 2008, the risk remains that unregulated parts of the financial system could trigger a global panic, the Washington-based lender of last resort said.
I do get concerned at times with the massive debt binge the world has been on with interest rates basically on a steady decline since the late 80’s you have to wonder what happens once rates start to rise.
The chart below clearly demonstrates the rapid rise in the 10-year bond rate over the last month. This has spooked the equity markets a bit and time will tell if it is just a run of the mill correction or the start of something bigger.
There’s also a lot of talk about yield curve inversion, but we’re not there yet.
According to the Guardian:
The stability report said the development of digital trading platforms and digital currencies such as bitcoin, along with other financial technology companies, has been rapid. “Despite its potential benefits, our knowledge of its potential risks and how they might play out is still developing,” it said, adding: “Increased cybersecurity risks pose challenges for financial institutions, financial infrastructure, and supervisors.
One other quote this week that caught my eye relates to the rise of automated or algorithmic trading. I believe this has the potential to be the cause of the next major market panic.
One thing is for sure, the next 6-12 months are going to be interesting.
