Morgan Stanley Sees Two Big Reasons Low Volatility Will End
- Low liquidity and market complacency may boost price swings
- Strategist Sheets sees risks whether data soften or pick up
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A combination of low liquidity and high complacency mean cross-asset volatility won’t stay at historic lows for much longer, according to Morgan Stanley.
“There are still two things that argue against the current levels of volatility being correct or sustainable,” cross-asset strategist Andrew Sheets said in an interview Friday. “The first is that market liquidity is still not great. The second: I’m not sure that the market in its newfound optimism has taken the story to the logical conclusion” about where asset prices are headed, he said.