Whether European stocks follow their Asian counterparts lower today, one thing's for sure -- volatility is back. And while the focus has been price swings in stocks, volatility in other assets are due to catch up as investors face a reckoning much bigger than this week’s equity selloff -- collective policy normalization by the world’s major central banks.
Despite the recent market turmoil, measures of volatility for both Treasuries and currencies have yet to revisit the levels seen the last time the VIX was this high (August 2015). Given the magnitude of the shift taking place in global monetary policy, cross-asset volatility can only be misaligned for so long.
Source: Bloomberg Pro Terminal
Jr Trader Alexander Kumanov
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