Morgan Stanley Says 2018 Most Volatile Year Since 2008

The year is only halfway through and already 2018 is on track to be the most volatile since the financial crisis, Morgan Stanley analysts wrote in a note published Monday.

Morgan Stanley defines a “large move” as an unexpected single day change in price compared to “what was implied by options markets at the time” in global stocks, bonds and currencies, the note said. The firm charted multiple markets around the world, ranging from currencies like the Australian dollar and the euro to commodities like Brent crude oil and copper. And of course, the firm looked at U.S. stocks.



The large moves Morgan Stanley is tracking are so-called “3-sigma” events, which is a statistical way of calculating data that is within three standard deviations of a mean.

2018 is on track to have more than 25 such moves in financial markets, the most since 2008 when there were nearly 35, according to the firm.

“Surprises (large moves relative to expectations) are becoming more common across asset classes,” wrote strategist Andrew Sheets.

Sheets and team believe that “tightening monetary policy and geopolitical risks” may be helping boost this year’s uptick in volatility.

And the remainder of the year is set to be even wilder because of the U.S. midterm elections, CFRA analysts said in a note Monday.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza