Escolar Documentos
Profissional Documentos
Cultura Documentos
This move marks just the third rate increase since the financial crisis of 2009. This rate increase
The CBOE volatility is one of three planned by the Federal Reserve for 2017. Shown above is a market summary from
December 14, 2016, when the Fed first announced the rate hikes would take place. This supports
index, widely
the theory that the Federal Reserve causes an increase in instability.
considered to be the
most effective Market Volatility on the Rise
predictor of volatility Predicted by analysts to be the result of interest rate hikes, volatility in the stock market is
increasing. The CBOE volatility index, widely considered to be the most effective predictor of
in the market, rose 5% volatility in the market, rose 5% this past week. This marks the third consecutive week wherein
volatility has risen. A strong correlation has been seen between volatility and interest rate hikes.
2
The market
overall is still CNBC: Fed Should Act Predictably to Avoid Big
taking an optimistic Market Moves
view, hence getting Feds plan for shedding $4.5 trillion in bonds
the policy mix right In an interview with CNBC, International Monetary Fund (IMF) director Tobias Adrian stated that
the Federal Reserve should act predictably when beginning to sell excess treasury bonds on their
is crucial for balance sheet for the current fiscal year. The IMF head used economic uncertainty abroad, in
places such as Europe with the looming debt crisis as reasons. It is believed that the U.S. should
financial stability limit as much volatility as possible, as investors are currently already facing heightened risk
going forward abroad. The Federal Reserve will begin open market operations, where bonds can be bought and
sold.
Figure 1CBOE Volatility Index Level, meant to measure approximate market volatility.
Closing Summary:
Expect Federal Reserve to Continue with Schedule Monetary Policy Changes
With international pressure mounting and investors becoming more weary, it seems unlikely that
the Federal Reserve would intend to fluctuate interest rates beyond what was already expressed.
The global economic climate is still riddled with uncertainty. The Federal Reserve can counteract
this uncertainty by showing faith in the American Economy.
3