Menu Close

(No) Fear! VIX Lowest Since 1993, Macro Risk Lowest Since 2012 (Did The Fed Kill Off Vol?)

Volatility and risk seems to have vanished from financial markets.

The VIX, the S&P500 index of volatility, is now at its lowest point since 1993.

And the Citi Macro Index is down to a low level last seen in 2012 and late 2009.

One reason? The Federal Reserve (and the other global Central Banks) have been painfully slow in allowing interest rates to rise (or unwinding their massive monetary stimulus known as Quantitative Easing [QE].

And thanks to The Fed & Friends, the US Treasury 10Y-2Y curve slope has remained artficially high since 2009 (mostly because of the repression of the short-rate).

Of course, the numbness in financial markets is also related to the historically low M2 Money Velocity that the US is experiencing. (GDP/M2).

Did The Federal Reserve (and other Central Banks) kill off fear and volatility? It certainly appears that way.

Have no fear! Yellen is here!

A photo of the Federal Reserve Open Markets Committee meeting.

 

This site uses Akismet to reduce spam. Learn how your comment data is processed.

RSS
Follow by Email
LinkedIn
Share