Two words are back on the lips of every investor in the City.
‘Event risk’ has begun to dominate trading floor conversations, as a slew of central bank decisions, legal rulings, and political upheavals threaten to bring an end to the calm that has descended upon the markets.
May is the one calm month we have before a pretty volatile JuneMarchel Alexandrovich After a brief break from the turbulence that dominated the start of the year, when fears over the strength of the global economy and the idea of a sharp slowdown in China unnerved money managers, volatility is set to return to the scene.
Mellow May is now expected to give way to what industry veterans are already calling ‘flaming June’, as a calm start to the month is to be followed by shifts throughout currencies, stocks and bonds.
Experts say that they expect June to be a ‘big month’ for the markets, and that things are unlikely to settle down any time soon.
Investors will face an alarming number of binary events – those with only two potential outcomes – between now and July.
The most important decisions will be those made by policymakers in the US, on whether to raise interest rates, and votes cast by the British public, on the UK’s continued membership of the European Union.
This post was published at David Stockmans Contra Corner on June 10, 2016.
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