‘Low for long’: Snoozy markets could be here to stay, says BlackRock
No need to set the alarm clock just yet.
The 90-year low in volatility in US equity markets could be here to stay, according to BlackRock, which has dug into the history books to study patterns of market activity for the last 150 years.
Richard Turnill, chief investment strategist at BlackRock Investment, looked at bouts of volatility from 1872 to the present day, and concluded that “low realised volatility can last for years, even with sporadic bursts.”
He noted that low volatility often overlaps with “sustained economic expansions”, which “supports the case for risk taking”. (This is a point he’s made before. More here.)
“Historical volatility does not settle around a long-term average,” he added. “Instead, it is often low for long and sometimes high. History shows volatility regimes can last a long time.”
Volatility in the US equity markets is at its lowest since at least 1927, with the S&P 500 recording no fewer than 13 successive closes with moves of less than 0.3 per cent in either direction.