From NYT:
China launched two days of military drills surrounding Taiwan on Thursday in what it called a “strong punishment” to its opponents on the self-governing island, after Taiwan’s new president pledged to defend its sovereignty.
Map from the article:
Here’s the disposition of US naval forces, approximate as of 20 May 2024.
Source: USNI FleetTracker, accessed 23 May 24.
Caldara and Iacoviello monthly GPR index for Taiwan (thru April):
Source: Caldara and Iacoviello (2022) index.
The presidential election was in January. May estimate not included.
Blackrock has its own index, but last publication was a month ago.
Source: BlackRock, 25 April 2024.
Assessment of market impacts of higher risk:
Source: BlackRock, 25 April 2024.
Unfortunately, in the absence of high frequency GPRs (as we have for the world, from Caldara and Iacoviello), we’ll have to wait until next month to find out the impact on measured risk.
As discussed in this post, a blockade is much more likely than an outright invasion (at least in the near future), while still achieving the objective of wreaking tremendous economic damage.
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