It has been over five months since the S&P500 Volatility Index (VIX) blew up to 65, but as of today, it trades at 14. This period has been volatile given the geopolitical, inflation, and financial stability issues. The pivotal point was the US elections, which changed the trend and resulted in it coming down by 40%.
The question is whether it moves up or still has room to fall further ? The answer will mostly change over the time frame. This will be due to events that are due to occur over the next few months.
This stream of events will start with an inflation release tomorrow. Since the last few releases have been above estimates the risk of its reversal is now higher and this puts the rate trajectory at risk. The same could be hinted at the FOMC meeting that is due to take place next week where a 25 bps cut mostly factored in.
Then as the month closes so does another year of uncertainty. And since the S&P 500 has given a return of 27% and outperformed the rest of the world. The rebalance of pension funds and others could cause some disturbance second half of the month.
Along with these events, trouble in Syria and a ceasefire in Gaza can be the geopolitical factors that would impact oil and financial markets.
Overall this month itself has enough events to impact the VIX before the next month's cycle begins which would involve a switch of the US administration becoming the biggest event in years to come.
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