The impact of the ‘Nixon shock’ 50 years on

This monthly commentary gives a roundup of global markets and trends.

In this edition:

• Last month marked the 50-year anniversary of President Nixon taking the US off the “Gold Standard”, which made it easier to issue more debt to finance growth.
• This has enabled the US authorities to deliver unprecedented fiscal and monetary stimulus to support the economy during the pandemic, leading to the shortest recession in history.
• Markets have grown increasingly dependent on loose monetary policy and there is considerable uncertainty on how they will react when it is withdrawn.
• While markets are currently supported by earnings, there may be volatility ahead if the Federal Reserve decides to taper.

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