Hong Kong: It’ll take more than central bank tightening to shake volatility from its year-long slumber, according to Goldman Sachs Group Inc. A large shock such as recession or war is usually required. That’s generally been the case for the 14 similar low volatility “regimes” since 1928, at least in equity markets, Goldman Sachs strategists Christian Mueller-Glissmann and Alessio Rizzi said. These periods on average lasted nearly two years, featured short-lived spikes and realized S&P 500 volatility was usually at or below 10. Markets have reflected this since January, with equities reaching record highs, strong global growth and declining bond yields, they said. The risk investors face near-term is a consolidation but no transition to sustained high volatility, and to guard against this, Mueller-Glissmann and Rizzi recommend protection through put spreads.

Source: Mint July 04, 2017 06:56 UTC