Market Volatility on the Horizon?

Jamie Dimon sees 'scary' world as interest rates return to normal.

Global markets will face increased volatility as central banks bring interest rates back to normal levels, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said.

“We should all hope for a normalization of interest rates—that’s a good thing,” Dimon said today during a panel discussion at the Fortune Global Forum in Chengdu, China. “As we go back to normal, its going to be scary, and its going to be kind of volatile.”

Investors have been encouraged to buy riskier assets as global central banks unleashed unprecedented monetary stimulus after the financial crisis of 2008. Concern that the policies would be reviewed grew last month, following comments from Federal Reserve Chairman Ben S. Bernanke.

Price swings across assets and around the world are holding below historical averages. Levels of investor concern in equities, commodities, bonds, and currencies, as measured by Bank of America Corp.’s Market Risk index of cross-asset volatility, are below readings from about 75 percent of days since 2000, according to data compiled by Bloomberg.

Daily fluctuations have widened in the past month amid speculation the Fed might consider curtailing its quantitative easing program of stimulus and reports on Chinese and American manufacturing trailed estimates.

“I am going to be looking at every word the Fed says,” Dimon said.

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