MICHEL PIREU: Weird swings show a global financial system in trouble
Coronavirus fears led to markets plummeting last week, but typical market safe havens and gold also fell
Last week was an unsettling week on global financial markets, and not just because the US stock market fell sharply enough to bring a decade-plus bull market to an end, but because as the New York Times put it: “Something weird is happening on Wall Street.” Underneath the headline numbers were a series of movements that did not really make sense when lined up against one another.
On a day when major economic disruptions resulting from the coronavirus pandemic appeared to become more likely, and might have been expected to make typical market safe havens more popular, many of the safe havens fell instead on Wednesday. That included bonds of all sorts, and gold. And there were reports from trading desks that many assets that are normally liquid — easy to buy and sell — were freezing up, with securities not trading widely. “They amount to signs — not definitive, but worrying — that something is breaking down in the workings of the financial system, even if it’s not totally clear ...