Investors anticipating another calm year in 2025 should be on guard for more shocks like the one seen in August as uncertainty around Donald Trump’s tax and tariff policies threaten to roil markets.
Strategists at Bank of America Corp., JPMorgan Chase & Co. and Spain’s Banco Bilbao Vizcaya Argentaria SA expect the continued flow of option selling to generally keep a lid on volatility, with JPMorgan seeing the Cboe Volatility Index averaging around 16, compared with around 15.5 across 2024. But BBVA points to a slew of factors — including rising uncertainty around US tariff policies, geopolitical tensions, overstretched concentration and valuation, signs of stress in funding markets and a weakening job market — that could spark more swings.