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Risk and realities

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  • Syrian events are agitating markets. The British Parliament will debate military action on Thursday, and markets are assuming some kind of military strike will take place thereafter. However, the risk averse reaction in markets may be going too far.
  • Syria could impact the global economy through 1) direct impact on oil supply, 2) contagion creating instability in other economies in the region, 3) an increase in global terrorism risk. Of these, only the second option is a threat, and it seems a fairly muted economic threat.
  • The new Bank of England governor gives his first keynote speech today. He will be speaking for himself, which gives markets an indication of how he may vote at future BoE MPC meetings (not quite the same thing as indicating what the BoE MPC will decide).
  • US pending home sales data is due. There has been some softness in the recent US housing data, but we would ascribe this as being more a function of supply problems than of a lack of demand (house prices continue to rise too, which is what the consumer cares about).

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