Will an obscure event trigger next crisis?

“The possibility of something triggering an event that moves us toward a crisis is way higher now than it's been in a very long time,” said Glen Capelo, head of rates for Academy Securities in New York. “The rates market is telling you it's going to happen, it just doesn't know what it is yet: whether it's Hong Kong, Brexit, European banks getting hammered, or the global economy. The system is in a more fragile state than I've seen in a long time and it will likely be an obscure, second-derivative event that creates the next crisis.”

Capelo said the unwinding of large positions or accounts being forced to take risk down could spark the next major volatility event. “

My guess is that the trigger will be something that's not on the radar,” he said. “The next problem will be centered around liquidity.”

— Fragile US rates market braces for volatility from everywhere