Quick Take: Volatility and the Fed
NEW YORK (TheStreet) -- TheStreet's Jill Malandrino is with SFG Alternatives' Larry Shover, discussing which asset classes are moving the most and where traders may be able to duck for cover.
Malandrino said that although Federal Reserve Chairman Ben Bernanke didn't provide any major surprises, currency and fixed-income traders had conviction in what he did say, sending the dollar soaring and bonds plummeting.
The move continues to wreak havoc in currency markets as volatility soars and 10-year Treasury yields hit 20-month highs.
Malandrino said the current downward trend in equities can snap back at any moment, but Shover said the bigger worry lies in the two formerly mentioned asset classes: fixed-income and foreign currencies.He added that "there's going to be a lid on the equity markets" until volatility smooths out a bit. Until then, the market will remain in a "tapering fit." Malandrino noted the sudden move on the VIX, and Shover was quick to suggest that investors were paying for protection, but not necessarily based on the U.S. economy. "I don't think they're worried about our economy per se, they're more worried about the dislocation around the world," he said. He also told Malandrino that investors who are long equities or looking to get long equities could also benefit from wide put spreads. He concluded, "This song has not played out, even a little bit," referring to the continued volatility being forecast around the world. -- Written by Bret Kenwell in Petoskey, Mich. . Follow @BretKenwell Follow @OptionsProfits
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