Hamish McRae: The market will work again. But can the people?

The great New York bond market has struggled back into action – and immediately marked up the price of US government securities. Insouciance, bravado or maybe just the resilience of human beings?

The great New York bond market has struggled back into action – and immediately marked up the price of US government securities. Insouciance, bravado or maybe just the resilience of human beings?

Markets, for all their apparent anonymous power, reflect the collective behaviour of the individual human beings who run them. Now, in these extraordinary times, we can only know how those human beings will react when they start trading again.

And the first indications are of the tremendous toughness of the markets and the people who run them. The New York Stock Exchange is still closed and when it opens it will have experienced its longest closure since 1933. But we caught a feeling for the strength of New York as a financial centre yesterday when the bond market reopened. It was not business as usual – how could it be? – but it was business.

Markets have two elements, for aside from the people there are also the systems: the trading systems themselves but also the electronic systems that provide information about the world and about the traders' positions. We have known for some time that, at a technical level, these systems are tremendously tough. Not only is everything backed up on computers entirely separate from the main ones, but financial institutions have stand-by dealing rooms from which they can operate at a few hours' notice. These are housed in unremarkable office blocks far from the shiny towers of the world's great financial centres.

Yesterday, in an heroic demonstration of their ability to survive, Cantor Fitzgerald, which occupied the 101st, 103rd, 104th and 105th floors of No 1 World Trade Centre, and which has lost maybe 700 of its 1,000 staff, reopened for business. Its offices in London (and Tokyo) as well as a back-up facility in New Jersey enabled it to do so. Cantor Fitzgerald is less well known in Britain because it is a specialist broker in US government securities but, as the largest such broker, it is hugely important to the US bond market.

So, from a technical standpoint we can now be confident that the world's financial markets can take just about anything that can be thrown at them. But can the people?

Trading in these markets, after all, is a gruelling, demanding task. The best traders have that complicated mixture of aggression and calm: when to run and when to hide, when to be brave and when to retreat. It requires a mixture of intuition, knowledge and sheer physical toughness that not many people have. That is why they are paid so much.

But everyone working in New York will be changed by the events of 11 September 2001. The great question is whether what has happened will change the behaviour of the markets in the weeks and months to come. Can these people keep working?

My guess is that markets will be more reflective in future. Of course, they will have their traditional shifts of mood from despair to euphoria – yes, some day euphoria will return. But the swings will be more muted. This catastrophe hits a market mood that was already fragile, with shares in their first bear market for a decade. For many people working in financial markets, that has been their first experience of bad times. Yesterday, paradoxically, that rise in the price of US government securities was a sign of that fragility. In an uncertain world people rush to things they feel they can trust, and the American government is bedrock.

In the weeks to come, New York markets will gradually recover their poise. In any case, New York is only one point, albeit a hugely important one, in a network of financial centres. In many areas of international business – as opposed to US domestic transactions – London is bigger.

But that more reflective mood will be universal. It is not just that traders in other financial centres will have lost close friends, or are employed by New York-headquartered companies. Something like this makes us all ponder what matters to us as part of humankind. Markets are human too.