News & Insights

Welcome to the FIA News & Insights, a one-stop resource that includes insights from senior investment professionals on timely market events, their views on the economy and their respective markets.  Find updates on the latest media information on Frost Investment Advisors, LLC and the most recent reprints, as well as, archival information for your reference.

News and Views image.

News & Views

Provided by the Investment Professionals of Frost Investment Advisors | December 13, 2021

Rocking into Christmas

Equity Market Volatility Spikes with Bond Uncertainty

Volatility for both the fixed and equity markets has increased recently, shown in the Move Index and the VIX in the chart below. Quarter-to-date, the yield on the U.S. 2-year Treasury note has more than doubled from 0.27 percent to a high of 0.69 percent last week, reflecting market expectation of an increasingly hawkish response to inflation from the Fed. The divergence between the Move Index and the VIX is stark, seeming to imply a lack of market consensus on future expected risks. This heightened uncertainty likely has three main causes: the effects of rising inflation, the ebb and flow of a recurring virus, and the guesswork relating to the Federal Reserve’s actions. The Fed is walking a tightrope between its dual mandates of promoting maximum employment and stabilizing prices. As the inflation numbers continue to be reported at elevated levels, we expect this will continue.

Click here to view full article.

Subscribe to our News & Insights

Get the latest posts straight to your inbox