needing to find sustainable solutions for greece, and doubts about how successful qe will be in the eurozone. these factors have a significant bearing on this rise in volatility. rising volatility in several financial assets seems to have been correlated with higher oil price volatility as a result of the drop in crude prices, which may sound a bit counterintuitive as lower oil prices typically bring about a better growth / inflation mix in the world ’ s largest economies. while demand and supply factors are responsible for the over us $ 50 per barrel decline in the price of brent crude, we do not have a full understanding of the drivers of the oil price decline. in fact, there are indications that financial factors, while not dominant, did have some bearing on oil price movements. or was the oil price decline seen as a harbinger of deflation in some regions? it could also be a reflection of deeper structural economic weaknesses that will complicate the task of policymakers, and thereby challenge the valuation of many asset prices. only time will tell. at the same time, the side effects of regulatory changes introduced in recent years, and in particular limitations on banks ’ proprietary trading, appear to have reduced the willingness of established primary dealers to hold sizable inventories of fixed - income securities, and to continue to make markets in the less liquid issues. as a result, turnover has tended to decline relative to amounts outstanding in many of these markets. at a time when fund managers ( both private and public ) have tended to diversify their portfolios and hold larger quantities of these less liquid issues, the risk of a sudden plunge in liquidity, and subsequent sharper price swings, may rise should asset managers be required to substantially reduce their positions in a relatively short period. yet, while these constraints to market liquidity are likely to be a sign that new regulations could be having unintended and undesired side effects, they should not be used as an excuse to put on hold the search for greater fairness, transparency and ethics in financial markets, both internationally and at home. in a world where both the size and the complexity of financial transactions keep increasing, yet where a growing number of intermediaries and bis central bankers ’ speeches trading technologies mean a decline in the personal relationship between buyers and sellers, the need for trust, strong culture and appropriate values becomes even more important. this requirement is illustrated by recent findings on collusive practices in reference rate setting and foreign - exchange markets

, non - residents were net buyers of domestic bonds to the value of more than r9, 1 billion. bond yields reversed course as non - residents started selling domestic bonds ( approximately r13, 7 billion in february ). there were also rising concerns and uncertainty as to the sustainability of the low oil price. there were indications that broad measures of longer - term inflation expectations – as depicted by the ber survey – had not declined significantly, at bis central bankers ’ speeches least not as much as market measures like break - even inflation expectations, which was a key factor behind the decline in long - term bond yields in january. the bank will continue monitoring the international and domestic factors driving bond market volatility. increased volatility would be a source of risk as it could undermine capital inflows and put pressure on the balance of payments. in that respect, it may be worth reflecting on, in particular, what the relationship should be between long - term interest rates and the price of oil. indeed, a decline in oil prices should depress the inflation rate in the short term but at the same time provide a boost to real gdp growth, and as a result need not have a big impact on long - term inflation expectations. a strong rally in longer - term bonds on the back of lower oil prices may be justified in places like the eurozone, where market participants fear that even a few months of negative headline inflation readings might entrench deflation ; yet one cannot make a similar case in south africa. after all, more likely, the decline in long - term sa bond yields was influenced by the strong correlation between domestic and foreign term premiums, especially with the us. however, this pattern highlights the vulnerability of domestic yields to any sudden steepening in global yield curves. causes of the recent uptrend in volatility while global long - term yields are still below the average levels that prevailed in the second half of last year, most indicators of financial market volatility, especially in the fixed - income and currency markets, have tended to move higher in recent months. furthermore, at least compared to the period of relative stability around mid - 2014, these indicators seem prone to swings that are both more frequent and bigger in magnitude. in a word, volatility seems to be getting more volatile. some commentators argue that this volatility is driven by, among others, geopolitical events, uncertainties about the timing and pace of us rate rises, tensions arising from