This week, the political upheaval in the Middle East spread to Libya, and therefore really began to hit the the oil market for the first time. Oil prices briefly hit levels which were 50 per cent above the average levels of last summer – which, if maintained, would represent a medium sized oil shock. Yet global equities suffered nothing more than a minor dent, and global bonds rallied markedly.
Elsewhere, the US Congress failed to make progress towards an agreement on raising the public debt ceiling. A permanent stand-off in Congress may be only a remote prospect, but it would be a catastrophic event for the world economy if it happened. Read more