The markets are reacting with their usual icy calculus to the news that several Red Cross volunteers have died from suspected Ebola in the Democratic Republic of Congo. British aid workers have been evacuated, triggering a fresh wave of risk aversion among investors who were already jittery about emerging market exposure. This is not just a humanitarian tragedy, it is a reminder that the virus remains a formidable disruptor of economic activity in a region that has barely recovered from the last outbreak.
The Congolese franc is under pressure, and gilt yields are likely to benefit from a flight to safety as capital retreats from frontier markets. The government's response, as ever, will be scrutinised for fiscal discipline, but the priority now is containment. The market's cold arithmetic suggests that the longer this drags on, the higher the risk premium demanded by investors.
Central banks may need to hold the line, but the bottom line is that volatility is back on the table.
