Credit Suisse: How To Trade End-Of-Year Market Volatility

• Credit Suisse believes that global markets will see elevated volatility throughout the remainder of 2015.
• The firm predicts that U.S. and European monetary policies will begin to diverge in December.
• Credit Suisse is bullish on the USD and bearish EURUSD in the medium-term.

It's hard to believe there's only a little more than a month remaining in 2015, but according to Credit Suisse analyst Sean Shepley, there are a lot of market-moving events packed into the last few weeks of this year. In a new report, Shepley discusses Credit Suisse's outlook for market volatility, monetary policy and global currencies.

Monetary Policy

Credit Suisse is watching for monetary policy divergence between the US and Europe starting in December. The firm expects the ECB to ease its policies in December and the Fed to begin tightening. "Our central view, shared by many in the market, is that the ECB will announce that it will run its €60bn a month asset purchase programme 'at least until March 2017' (instead of Sept. 2016) and cut its deposit rate by 10bp to -0.3% from -0.2%," Shepley explained.

Related Link: Peter Schiff: The Economy Is Doomed

Currencies

Credit Suisse technical analysts remain bullish on the USD and bearish EURUSD in the medium-term. "At the same time, we are seeing a resumption of the US/Germany yield spread widening trends," Shepley added.

Volatility

Shepley noted that traders that are expecting global markets to cruise into the end of the year will be disappointed. Credit Suisse expects that the large number of potential catalysts between now and the end of the year suggests that markets will likely be extremely volatile into year's end.

Outside of monetary policy decisions in both Europe and the US, December catalysts include French regional elections on December 6 and 13, and Spain’s general election on December 20.

Disclosure: the author holds no position in the stocks mentioned.