How Central Banks Killed-off Volatility (Volatility Makes Financial Markets Go Round!)

Volatility makes financial markets go round!

Unfortunately, central banks like the US Federal Reserve have killed off volatility. Even though The Fed is raising its target rate since the election of Donald Trump as President.

cbkill

What happened? The Federal Reserve under Ben Bernanke smashed down the Fed Funds Target rate to 25 basis points in December 2008 and The Fed began purchasing Treasury Notes and Bonds along with Agency Mortgage-backed Securities (MBS) in attempt to artificially push down interest rates. Volatility in stocks (VIX) and Treasuries (TYVIX) seem stuck in glue as The Fed has been raising its target rate (once in 2015 and six times after Trump was elected).

Happy a safe and happy Labor Day weekend! And watch some college football!

tsanderslolb

 

 

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