Geopolitical and Political Risks Could Drive Volatility this Week

The FOMC (Federal Open Market Committee) raised interest rates by 25 basis points, which turned out to be a non-event. The proposal of $50.0 billion in tariffs on Chinese imports—and the potential for China’s $3.0 billion in retaliatory tariffs—pushed wary investors away from risk assets as they feared escalation into a trade war. Unlike economic events, these political events are difficult to predict and could go either way in terms of tangible impact on the economy. When adding the unpredictable nature of President Trump’s decisions to the mix, markets should be prepared for higher volatility in the week ahead.