Quick Bites | Volatility falls to lowest level in a year

Fear is reducing on Wall Street. Just look at the so-called “Fear Index”.

The VIX (officially the Chicago Board Options Exchange Volatility Index) measures volatility, the technical term for market swings. A rising VIX is usually regarded as a sign that fear, rather than greed, is ruling the market. The higher the VIX goes, the more nervous the market looks. But the VIX has now fallen to a relatively low level, just 16.83, and the lowest level for a year.

So are investors complacent?

Perhaps. Over the last year, we have experienced an unexpected rise in inflation and consequently almost unprecedented rise in official interest rates, a massive war in Eastern Europe and rising geo-political global tensions, an energy crisis in Western Europe, and more recently, a banking crisis.

A lot of these issues are beginning to resolve themselves, perhaps accounting for the fall in the VIX. Inflation is declining, interest rates are likely about to peak, the war in Ukraine seems to have developed into somewhat of a stalemate, the energy crisis is over (for the moment), and the banking crisis appears to have been limited to a handful of poorly managed banks.

Source: Bloomberg

The VIX is quiet for the moment. Perhaps too quiet?

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