FTSE gets a fit of the vapours

Stocks, bonds and currencies had another fit of the vapours early this week. Major Western stockmarkets slid by around 1% on Tuesday. The FTSE 100 slipped under 6,300 for the first time since April. US ten-year Treasury yields jumped, turning positive in real terms for the first time in 18 months. Emerging markets took a beating as investors fled riskier assets ). The Thai and Philippine stockmarkets both slid by 5% in a day.

What the commentators said

It's "pathetic", said Allister Heath in City AM, that investors have "grown so used to being mollycoddled by unending injections of liquidity" that they "panic" at the prospect of this crutch being withdrawn. Investors are also rightly worried that the fundamental picture isn't good enough to sustain a rally without cash being hurled at it by central banks, as MoneyWeek has pointed out in recent months. Fears of a slowdown in global growth are spreading.

With all markets now artificially inflated and bonds in particular in a huge bubble, concluded Heath, the withdrawal of central-bank support could mean a "hugely painful" adjustment. Of course, the authorities could always take fright and give markets yet more of the liquidity drug they "so desperately crave".

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