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Are markets really braced for further volatility?

Despite the rise in volatility lately, compensation for risk across several major asset classes still seems quite low relative to history. That means, in our view, that if volatility were to remain high, it could spark further selloffs across asset classes as risk premia rose commensurately. But even if volatility abated, low risk premia could limit the size of any eventual rallies.

In view of the wider interest, we are also sending this Global Markets Update to clients of our Asset Allocation and FX Markets Services.

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