Arif Husain: Investors Need to Prepare for Volatility Caused by Shifts in Federal Reserve Policy

T. Rowe Price's Global Head of Fixed Income, Arif Husain, stated that as the Federal Reserve considers reducing its balance sheet and scaling back forward guidance, investors need to prepare for an era of greater uncertainty and volatility management. Asset prices are becoming more sensitive to economic data and policy trends, and strategies that benefited from the low volatility of the post-global financial crisis era will face challenges in the coming years. If the Federal Reserve shrinks its balance sheet again, it will prompt markets to reassess expectations for declining volatility. Volatility will first appear in the interest rate markets, then spread to the credit markets, and eventually affect the stock markets.