U.S. Outlook: Market volatility takes center stage

Scott Anderson
Posted by Scott Anderson
Chief Economist

After months of abnormally low financial market volatility, risk is suddenly a two-way street again.

Graph showing recent spike in stock market volatility.The CBOE VIX Index, a measure of future stock market volatility, increased to 37.3 last Friday. The is the highest level of the VIX in two-and-a-half years.

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Feb. 9.

Key observations:

  • I just want to point out that Janet Yellen sure knows when to make an exit. The same day Jerome Powell became the official chairman of the Federal Reserve, the equity and bond markets started their swoons.
  • It’s going to take a lot more selling for the FOMC to rethink its interest rate strategy or its outlook for the U.S. economy.
  • I would put the probability of the U.S. economic recession over the next 12 months at a relatively low 14% today.
  • The market and the economy should be able to land on their feet.

 

Read my full report.

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