Which 1998 hedge-fund failure intensified global market turmoil after Russia defaulted on domestic debt?

The 1998 hedge-fund failure that intensified global market turmoil was Long-Term Capital Management.

Long-Term Capital Management, or LTCM, was founded in 1994 by John Meriwether and employed prominent finance academics, including Nobel Prize-winning economists Robert Merton and Myron Scholes. The fund used highly leveraged trading strategies based partly on the expectation that price differences would converge.

Russia’s August 1998 default and ruble crisis produced an extraordinary flight to safety. Positions that LTCM expected to converge moved farther apart, and the fund faced severe losses while its leverage limited its ability to sell assets without worsening market conditions.

The Federal Reserve Bank of New York helped coordinate a private-sector recapitalization by major financial institutions in September 1998. The episode was not itself a stock-market crash, but it amplified concerns about systemic risk and demonstrated how leverage could transmit shocks through global markets.