Is Depressed Inflation Sowing The Seeds Of Market Volatility? – ValueWalk Premium

Is Depressed Inflation Sowing The Seeds Of Market Volatility?

Lack of market volatility tied to depressed Inflation?

A rapid, unexpected change in interest rate expectations could lead to a dramatic increase in market volatility, which will result in sell-off in risk assets according to Nomura. What would inspire such a dramatic change in interest rate expectations? The answer is simple, a rapid increase in inflation (something few analysts expect) would be the catalyst that would set off a sudden change in Federal Reserve policy.

It is no surprise that many analysts and economists have given up on inflation. After many quarters of negative inflation surprises, confidence in inflation . . .

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