ECB’s Knot Warns of Market Correction as Risk May Be Underpriced
- Feels uncomfortable about low volatility given global crises
- Knot says ECB’s QE program achieved what could be expected
A European Union (EU) flag hangs in front of a board displaying company stock price information inside the Paris stock exchange, operated by Euronext NV, in La Defense business district in Paris, France, on Monday, May, 8, 2017. Emmanuel Macron pledged to heal France’s rifts after his victory over Marine Le Pen in the presidential election, saying that he’ll work to address the concerns that were exposed during one of the most divisive campaigns of recent history.
Financial markets may be underpricing global risks, leaving them vulnerable to a major correction, according to European Central Bank Governing Council member Klaas Knot warned.
As global stocks surge, measures of volatility suggest unprecedented calm even as crises around the world -- including the Catalan separatists in Spain, Turkey’s diplomatic row with the U.S., North Korea’s missile tests and the danger of a hard Brexit -- make political headlines.