IMF warns of market complacency amid heightened geopolitical uncertainty

‘Widening disconnect’

The International Monetary Fund has raised the alarm over the “widening disconnect” between geopolitical uncertainty and relatively low market volatility levels.

In its latest Global Financial Stability Report, the IMF argued that current market imbalances, such as "lofty" asset valuations, rising government debt and heightened use of leverage by financial institutions – specifically by hedge funds and private credit funds – could exacerbate future stability risks by amplifying adverse shocks. These shocks have become more probable now as a result of economic and geopolitical uncertainty, the IMF noted. "Much of this uncertainty is because half of the world's population has elected or will elect new governments this year, and future policies t...