VOLATILITY is back. A long spell of calm,in which America’s stockmarket rose steadily without a big sell-off, ended abruptly this week. The catalyst was a report released on February 2nd showing that wage growth in America had accelerated. The S&P 500 fell by a bit that day, or by a lot on the next trading day. The Vix,an index that reflects how changeable investors expect fairness markets to be, spiked from a drowsy 14 at the start of the month to an alarmed 37. In other parts of the world nerves frayed.
Markets later regained some of their composure (see article). But more adrenalin-fuelled sessions lie ahead. That is because a transition is under way in which buoyant global growth causes inflation to replace stagnation as investors’ biggest alarm. And that long-awaited shift is being complicated by an extraordinary gamble in the...
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Source: economist.com