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The Rise of Volatility - Phase I

In the past two weeks, a unique pattern y has emerged throughout the financial markets and across asset classes. This pattern is of the rising volatility indices of each asset class accompanied by rising yields and oil prices. In a normal phase, this would be moving in opposite directions.

The Volatility indices are up by 30% and 173% for bond and crude oil markets when compared to last month's low. This indicates there is a lot of uncertainty in the next few months related to interest rates and conflict in Israel.

Though these are initial moves if they continue as the real-world issues get more complicated there is a bugged risk of large spikes ahead as the long-dated patterns indicate towards a rough winter season.

Wishing this the equity market volatility is still contained though it is above last month's low. But given the FOMC meeting in November and the odds of a rate hike being low for now is keeping the prices stable.

The level at which equity markets are at can trigger big moves in the short term on either side as the CTA trigger levels are on the edge of either side. This would result in a clear importance to watch out for volatility levels ahead rather than index levels.


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