Market volatility is likely to surge in the coming months as yield curves turn positive, signaling economic uncertainty.

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“Is the market volatility set to surge in the coming months?

Over the last 30 years, US yield curves have been a leading indicator for the volatility index, $VIX, with roughly a 36-month lag.

The periods of flattening and inverted yield curves have been associated with suppressed volatility.

On the other hand, once yield curves turn positive, market volatility tends to increase and remain elevated for 12 to 24 months.

Recently, the number of yield curves turning positive has increased, including the most commonly watched difference between 10-year and 2-year Treasuries.

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This suggests volatility will likely climb over the next several months as economic uncertainty increases.

Brace for more bumpy markets.”


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