The news that Al-Qaeda leader Bin Laden is dead has met with a varied response in markets, in what can best be described as a mix of relief and confusion. The dollar is slightly firmer, oil is off a touch and silver plummeted nearly 10% in the initial move. However, it is something of a double-edged sword in terms of event risk going forward. The reaction we've seen so far can be contrasted with the risk that the news re-invigorates terrorism from either Al-Qaeda, or related splinter groups. In terms of the near-term, this has been acknowledged by the heightened state of alert that the US has issued, especially for Americans overseas. Longer-term, it's a question of how well Al-Qaeda and affiliates (either linked or not linked) regroup. What we can be sure about is that the threat of terrorism has not disappeared because of overnight events and has likely increased in the near-term.
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