The assaults did not seem to have been aimed primarily at the financial industry, so much as to coincide with the G8 heads of governments' summit hosted by the UK in Gleneagles.
But as on September 11, 2001, the horror of violence penetrated the lives and working space of people in the financial markets, bringing the danger and brutality of global conflicts right into areas that people usually deem safe.
The result of an assault occurring in London — with one bomb going off in the underground near Liverpool Street, at the heart of the City financial district — was a sharp and immediate effect on financial markets worldwide.
European stock markets fell all morning, with the FTSE 100 losing 3.3% of its value as the London Stock Exchange declared a 'fast market' in which market-making rules are suspended. Government bonds rallied and credit spreads widened; and almost all bond issuance in Europe and Asia came to a halt.
But the immediate flight to quality did not turn into a market crash. Stock markets started to recover from about midday London time, when it began to seem clear that the carnage had, at least, stopped.
By the close, the FTSE 100 was only 1.36% down on the day — a fall quite within the scope of normal trading.
And remarkably, Gaz de France and its lead managers Calyon, Lazard-Ixis, Merrill Lynch and SG CIB were able to plough ahead and price the world's biggest IPO for four years in the teeth of the volatility.
The morning's government bond rally lifted the 10 year US Treasury from a yield of 4.07% to 3.93%, while the 10 year Gilt hit a two year high of 4.12%. Ten year Bunds rallied from 3.22% to strike an all-time low yield of 3.08%.
But again, much of the effects were soon reversed. By the end of the day, Treasuries were back to 4.02%, Gilts to 4.202% and Bunds to 3.17%.
The credit default swap markets, particularly the indices, showed their colours as the most liquid guide to credit pricing as the iTraxx Europe widened 4.5bp in busy trading to 43.5bp before recovering 1.5bp by the close.
The Crossover Index of lower rated credits widened 50bp-60bp in the morning to trade at 345bp, but climbed back to close at 310bp/320bp.
Liquidity largely held up well in the CDS market, though bid/offer spreads widened during the most intense trading.
The recovery appeared to be due partly to relief that the bloodshed, though horrifying, had not been as bad as the train bombings in Madrid on March 11, 2004 — or, of course, the nightmare of 9/11.
But several market participants also reported that they had been helped by having been through incidents like this before.
"Today's events were shocking in the extreme," said one head of bond syndicate in London. "But it is becoming less uncommon, and, with the 9/11 experience behind us, we are much better prepared for this kind of activity."
Financial market professionals are always adaptable, and grim as it may seem, they appear to be adapting to the higher level of physical danger that now affects people working in the world's financial centres.
