The market is now beginning to reflect the possibility that the Fed will raise interest rates at the end of 2022, and given such changes, volatility on all types of assets now looks unsustainably low. The "panic index" continued to climb (from a relatively low base) for more than a year before the start of the last US tightening cycle, although the Fed made it clear that it would move forward at an annual rate after it began raising interest rates at the end of 2015.

And given the potential ups and downs before and after each FOMC meeting, which traders now see as possible for the Fed to act, overall volatility should rise. Although Powell made some soothing words after the inflation data exceeded expectations, the surprising level of inflation did have an impact on FOMC's policy thinking.

So just wait and see the rise in volatility and the increase in volatility.

This article, excerpted from the Bloomberg Markets Live Review, represents only the author's personal views and does not constitute investment advice.