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Market Minute: Financial market volatility could be returning—here’s why

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Days of repose. Perhaps that is the best description of the lazy days of summer across financial markets.

Moderation of volatility in equity and bond markets, and a general optimism that tech and financial valuations would continue to bolster the rest of the market, had prevailed.

That ended this past Friday.

Conditions are aligning for a return of financial market volatility for the rest of the year due to the massive revisions to U.S. employment data and broad concerns over the reliability of federal government-produced economic statistics.

Both the VIX index of S&P 500 volatility and the MOVE index of the U.S. Treasury market volatility managed to drop below their long-term, non-recessionary averages in recent weeks. We expect that to end as the market focuses on how trade taxes will affect the real economy through inflation and employment channels.

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About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel and the UCLA Anderson School of Management's Board of Directors, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia. In December 2023, Brusuelas and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

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