Goldman Sachs: War or recession required to break persistent low volatility

Fed tightening policy not enough

A large shock such as a recession or a war, rather than tightening from central banks, is needed to help jolt market volatility from record low levels, according to Goldman Sachs.

According to Bloomberg, Goldman Sachs strategists Christian Mueller-Glissmann and Alessio Rizzi said periods of low volatility such as the current one have lasted on average as long as two years. They said it was unlikely fears of Federal Reserve tightening would cause increased volatility, despite swings in the VIX, or the Fear index, over past week. Last month at its latest FOMC meeting, the Fed hiked interest rates for the second time this year but also spoke about tightening its balance sheet towards the end of the year, effectively beginning to reverse the quantitative easing pro...