Markets

Low volatility for longer

Guschenkova / Shutterstock
Guschenkova / Shutterstock

U.S. equity market volatility (vol) has been plumbing lows, stirring concern that a spike is overdue. We believe low realized vol can last for years, even with sporadic bursts, and it tends to overlap with periods of subdued macroeconomic vol. The chart below helps explain why.

We dug into data on U.S. equity market vol spanning more than a century to better understand its patterns. The chart shows realized (i.e., historical) volatility does not settle around a long-term average. Instead it is often low for long and sometimes high. We see regimes as a better framework for understanding vol versus expecting it to return to a "normal" level. History shows low vol regimes can last a long time.

What triggers a switch?

Global macro outlook Learning to live with low vol gross domestic product expansion lasting years VIX Weekly Commentary Richard Turnill is BlackRock's global chief investment strategist. He is a regular contributor to The Blog . Listen to Richard Turnill and Jeff Rosenberg talk about BlackRock's midyear investment outlook on the inaugural episode of our podcast, The Bid .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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