Institution: Investors may need to prepare for the new Federal Reserve era; uncertainty and volatility could intensify

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Golden Finance reports that on June 17th, T. Rowe Price's Global Fixed Income Chief Arif Husain wrote in a report that as the Federal Reserve considers reducing its balance sheet and decreasing forward guidance, investors "may need to prepare for a different era of management, characterized by greater uncertainty and less constrained volatility." Asset prices may become more sensitive to economic data and policy trends. "Therefore, strategies that benefited from the low volatility era after the global financial crisis may face increasing challenges in the coming years"; "We believe that if the Federal Reserve attempts to reduce its balance sheet again, especially after the central bank ends its latest round of quantitative tightening by the end of 2025, it could prompt markets to reassess long-standing expectations of declining volatility." He wrote that volatility might first appear in the interest rate markets, then spread to credit markets, and eventually impact the stock markets. (Sina Finance)
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