If the four horsemen of the apocalypse are pestilence, war, famine, and death, then the potential for war to join pestilence probably won’t help the markets. Needless to say, it was a bumpy week across some financial markets, with the S&P 500 at one point on Monday falling by 4.3%, before staging a strong recovery to finish the day higher. The flight to safety resulted in 10-year yields dipping from 1.88% last week to 1.76% on Monday, though rebounding following Fed Chairman Powell’s post-FOMC press conference, which highlighted the Fed’s strong desire to get inflation back down.
The cause of these jitters is down to a number of factors, which we discuss in this Economics Weekly, with a focus on the rising tensions between Russia and the Ukraine and how equity markets have responded to wars in the past.
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Richard de Chazal, CFA, is a London-based macroeconomist covering the U.S. economy and financial markets.