Global financial crisis, recession risks raised as US-China trade war tensions escalate over currency row
- Former US Treasury Secretary Lawrence Summers says world at the ‘most dangerous financial moment’ since the 2009 global economy meltdown
- Washington labelled China a ‘currency manipulator’ after the yuan exchange rate dropped to its lowest rate for 11 years on Monday
“We may well be at the most dangerous financial moment since the 2009 Financial Crisis with current developments between the US and China,” former US Treasury secretary Lawrence Summers tweeted on Tuesday.
Summers warned that with the collapse in global medium and long-term interest rates, markets are now suggesting “only slightly less than” a 50 per cent chance of a recession over the next year, the highest level of risk since 2011.
Yields on US 10-year Treasury bonds have tumbled to 1.74 per cent, and may possibly test their low of 1.43 per cent reached in 2012, in the aftermath of the global financial crisis, as soon as this week.
The tumble in the world’s stock markets has only exacerbated the risk, with a sell-off in Asian stocks continuing on Tuesday and European markets also down in early trade.
