The financial markets — stocks, bonds, commodities and options — are more interconnected globally than they’ve ever been.

That’s because of growing international trade and cross-border investments, and highly liquid, nimble capital markets. As one part of the world sneezes, the rest of the world catches a cold almost instantaneously.

This cascading risk is what the U.S. and worldwide markets faced in March 2020 with a rapid decline in asset values — stocks
SPX,
+1.49%
,
bonds
TMUBMUSD10Y,
1.629%

and even gold
GC00,
+1.01%
,
all at once — that led to the precipice of a systemic meltdown.

Fortunately, due to the fiscal and monetary intervention of the Treasury, Federal Reserve and Congress, the worst-case scenario was averted.

Their actions injected liquidity into the short-term funding markets, which rippled through credit markets and…

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