Parsing recent asset price volatility

The US midterm elections give hope on a more normal international environment

The world economy has been in unprecedentedly difficult territory, with the incomplete recovery from the pandemic, and Russia’s invasion of Ukraine. In February this year, the war began and the Fed started tightening, which derailed many economies around the world. Global financial conditions have been tight, with many central banks fighting off the post-pandemic inflation. This tightening sparked difficulties in many asset classes, such as housing, cryptocurrencies, and tech stocks.

In this setting, it was surprising to see global financial markets fare well in the past week. A few important developments have come together, and we in India should think about