James E Glassman, MD and Head Economist, JP Morgan Chase & Co, tells ET Now that the crisis in Europe may tamper things a little bit and limit how far long-term interest rates are going to move up in the US.Edited excerpts:What spooked the global markets? There is a scare of early elections in Italy but at the core of the problem is the Italian economy which has been an area of contention for a while now. What is your view?Yes, that is true. There are lots of problems but the truth is Italy is making progress. The unemployment rate is coming down. Growth may be slower, but this is a long running story. The reason for the markets reacting the way they are, could turn out to be the possibility of a referendum on whether to leave the European Union or not. Italians have to ask themselves whether they are better off in the union or out of it. Common sense tells you that for all the complaints they have, the European Union has been an important experiment for Italy and they have been benefiting. There is a lot of euro scepticism brewing but at the end of the day, we are going to find out that Italians understand that they are better off within the family rather than out on their own. I cannot imagine what they would have to deal with if they decided to exit the European Union. At the origin of this experiment, the Treaty of Rome, Italy was an important player. You are probably right that the economy is not doing as well as the broad region and immigration issues are creating a political crisis more than an economic crisis as long as it does not get us to the stage of having to worry that Italy may leave the European Union.This wrinkle has surfaced in the European Union. On the other side, a selloff happened in emerging market currencies. On top of that, the US 10-year paper has suddenly gone below 3%. How should we understand the global dynamics because there are too many parts suddenly?Yes, and right now it is a political crisis in Italy that has shaken the markets. Rates have been rising in the US gradually and that has been creating some of the outflow or lesser inflow to emerging markets. But if you look at the US economy, the world would be in much better shape if the US central bank fails to normalise interest rates when the economy is running pretty hot.We have not seen a lot of the stimulus that has been flowing through and unemployment is very low. Maybe it is a challenge. The biggest challenge is the normalisation of interest rates in the US but the crisis in Europe may tamper things a little bit because the market realises there are stresses elsewhere and that does limit how far long-term interest rates are going to move up in the US. We have seen the 10-year yield backing down a bit and that should be a stabilising force. The real story though is that the global economy is in pretty good shape and inflation is fairly well behaved. With that as a backdrop, it is hard to see how this could derail the global recovery that has been underway.