Alan Greenspan, the high priest of American monetary policy for nearly two decades, has died at 100. The London market reacted with a collective intake of breath, then a shrug, a peculiarly British response to the passing of a man who more than any other shaped the financial architecture of the late 20th century. Gilt yields barely twitched, the FTSE 100 held its nerve, and the pound remained steady against the dollar.
In the City, they know the dead do not move markets. But Greenspan’s legacy is written into the very DNA of the modern financial system. His tenure at the Federal Reserve, from 1987 to 2006, was a masterclass in the art of the possible, an era of low inflation, steady growth, and the occasional crisis, each navigated with a mix of data, instinct, and the occasional opaque utterance.
Investors will recall his “irrational exuberance” speech in 1996, a warning that went unheeded as the dot-com bubble inflated. They will remember the rate cuts after 9/11, the liquidity injections that followed the Long-Term Capital Management collapse, and the Greenspan put, the belief that the Fed would always step in to save the market from itself. But they will also remember the easy money that fuelled the housing bubble, the regulatory light touch that allowed derivatives to proliferate, and the belief that markets knew best.
Greenspan was the architect of an era that ended in 2008, but his ideas of central bank independence and inflation targeting remain the orthodoxy. The Treasury will no doubt issue a statement praising his dedication and service. The Bank of England may lower its flags to half-mast.
But the real tribute is in the bond market, where yields remain low, a testament to the credibility he built. The question now is whether his successors can maintain that faith. The City will watch, and wait, for the next chapter.
For now, the man who was the closest thing to a monetary deity is gone. The markets, as ever, will find a way to adapt. We will continue to update this story as markets open and tributes flow.
For a generation of traders, he was the backdrop to their careers. His death marks the end of an era. But the markets, like time, march on.
We will bring you the latest numbers and analysis as the day unfolds.