The recent crisis in markets has led to a structural break in volatility that mirrors what occurred in the mid-1990s, Jeremy Beckwith, chief investment officer at Kleinwort Benson, told the FT in Thursday’s View of the Day column.Back then, he says, there was a steady bull market in equities driven by robust economic expansion: “The Vix, an index that gauges market volatility, traded in a 10-20 range. But then, a credit event in Russia brought huge uncertainty to all markets.”

From 1998 to 2002, the Vix traded in a 20-40 range. “The break in volatility preceded the bull market peak by two years.”

The period since 2000 has again seen steady economic expansion, but on a much more global scale, with emerging economies growing strongly, says Beckwith.

The lack of economic volatility has been reflected in a low level of market volatility, he adds, noting that in the past four years, the Vix has again traded between 10 and 20.

This summer’s credit crisis occurred in the US, but the lessons are similar, he says. “Economic weakness prompted by the subprime crisis will lead to higher market volatility over the next few years.

This structural break in volatility does not mark the end of the bull market, according to Beckwith, but rather, “the emergence of the next bubble”. Afterall, he notes, the “bubble sectors” of this decade, such as Chinese and commodity stocks, “have confirmed themselves by their market behaviour over the last five weeks.”