This is not reflected in today’s volatility levels and might tempt market participants to neglect the necessity of hedging against changes in interest rates. Let me make it clear: low volatility does not stand for low risks and interest rates will rise again at some point. So, have financial markets entered a new phase of “irrational exuberance”? Such a verdict is certainly debatable.
However, during the second recessionary dip, unemployment increased, although aggregate vacancy rates remained close to long-term averages. In addition, the second recessionary period led not only to extensive, but also to very persistent job losses in some euro area economies. The proportion of people in long-term unemployment rose substantially.