UBS strategist says recent volatility spike was an 'overreaction,' but anticipates more in the future.

• The global economy has been the source of uncertainty and volatility in August's markets.
• Gerry Fowler, head of European equity strategy and global derivative strategy at UBS, stated on CNBC's "Squawk Box Europe" that the spike in volatility was an "exaggerated response."
• Fowler anticipates that markets will have a "slightly higher volatility level" in the future, as stated by UBS.

The global economy's health uncertainty has caused August to be a volatile month for markets.

In the U.S., a weaker-than-expected jobs report at the start of the month raised concerns about a potential recession and caused U.S. stocks to slide. Meanwhile, a more hawkish tone from the Bank of Japan led to an unwinding of the yen "carry trade" and saw the Nikkei fall over 12%.

On August 5, the VIX, a measure of market volatility, surpassed 65, an increase from the previous day's 23. However, it rapidly retraced and was last trading at approximately 14.5.

Gerry Fowler, head of European equity strategy and global derivative strategy at UBS, stated on CNBC's "Squawk Box Europe" on Tuesday that the spike in volatility was an "exaggerated response."

Historically, a decline in nominal GDP, interest rate cuts, and uncertainty about the jobs market have increased volatility, which UBS had anticipated would occur, according to their explanation.

Fowler stated that the last couple of weeks have been as expected, except for the spike in the market, which was a result of an overreaction. However, the retracement now seems to be an overreaction as well, with consequences in the market.

"We should anticipate a moderately elevated level of volatility until we are certain that the slowdown will not result in job losses in the U.S. This is in contrast to the volatility we have previously experienced."

Fowler predicts that economic slowdown in the U.S. may result in more job losses and a harder landing, which will be a key factor in volatility.

The next nonfarm payrolls report and weekly initial jobless claims will be crucial indicators in the upcoming weeks, according to him.

The next few months will rely on job data points as the key indicators to determine whether the current slowdown is a mid-cycle slowdown that rate cuts will eventually support or if it is something more severe and leads to job losses and a deeper slowdown or recession.

Fowler anticipates that markets will have a "slightly higher volatility level" in the future, as stated by UBS.

He stated that markets are likely to be trading within a range with a slight upward or downward tilt, possibly remaining sideways. However, he emphasized that it is not the strong markets we've experienced.