Rising interest rates around the world will not yet lead to another financial crash – here's why

This is not just about the decisions of the central banks. The long decline in bond yields that started in the early 1980s reversed two years ago, and there is every prospect of a long period of rising rates. But the rise will not be a straight line

Mario Draghi, president of the European Central Bank, said this week that the key global risk was a sudden jump in interest rates. He is quite right (Reuters)

That was the week that was – at least for financial markets.

After a vicious meltdown, US markets bounced back on Friday, though not quickly enough to rescue UK shares. The FTSE 100 index closed at 6996, having lost more than 10 per cent of its value since its peak of 7877 in May. That, in the strange euphemistic jargon of the markets, qualifies as a “correction”.

So once again we have been reminded that what happens in the US still dominates the world markets. When America sneezes, the rest of us catch a cold.