Nothing to fear: The fallout from economic turbulence

Given the heightened turbulence that financial markets have experienced in each of the previous two summers, perhaps we could almost have come to expect an increase in volatility as a feature of this time of year. However, the market turmoil we have seen of late is not simply a replay of some seasonal pattern. It has differed in one key way from price behaviour over the summer months of 2011 and 2012. In these previous phases, ‘risk assets’ such as equities suffered while ‘safe havens’ such as mainstream government bonds performed strongly. During this most recent phase, however, both...