Volatility

Category: Quant Insight

Volatility has been declining for stocks in the short term and continues to stay low in the long term. This, combined with the strength of momentum and breadth, is a strong positive sign for the stock markets. The increase in volatility for bondd is consistent with the somewhat wild ride for yields in the past few months and, we think, indicates a slow march toward a bond bear market.

Market volatility is an indicator of financial stress. Low or declining volatility environments may indicate favorable periods for equity investments, whereas rising volatility periods may favor sovereign debt and developed market currency exposure.

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