This is a syndicated repost courtesy of Confounded Interest – Online Course Notes for Financial Markets. To view original, click here. Reposted with permission.
The VIX (Chicago Board Options Exchange SPX Volatility Index) has fallen below 10 and the S&P500 index has soared with massive Federa Reserve stimulus (aka, the punchbowl).
The TYVIX (CBOE CBOT 10 year U.S. Treasury Note Volatility Index) has fallen below 4 despite Fed rate increases and their lame unwinding of their prodigious balance sheet.
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This bring up the question: Has The Fed lost control of markets? This is important in that it may lead the Fed Open Market Committee (FOMC) to raise rates as a faster pace, as indicated by The Fed’s “Dot Plot.”
Meanwhile, “inflation” remains subdued at 1.5% YoY.
We will see if The Fed is speeding up their balance sheet unwind after today at 3pm EST.
Will there be a trigger event that will bring markets crashing back to earth?
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