Volatility Repression: VIX Hits 4th Lowest Level Since 1990

The Chicago Board Options Exchange SPX Volatility Index (aka VIX) just hit the 4th lowest since 1990.

In fact, the low VIX regimes are 1) May 2017 to today and 2) December 1993).

Of course, the current low volatility VIX regime is courtesy of The Federal Reserve and their low interest rate policies.

November and December 2006 was a third low volatility regime, shortly before the housing bubble burst. So, low stock market volatility is not necessarily a good sign.

Here is a closer look at VIX before The Great Recession and after, with The Fed’s massive intervention. No the VIX repression in 2005 and 2006. Then KABOOM!

vixfed

Finally, here is a close-up of 2000-2008 showing VIX repression in 2003-2006.

vixcloseup.png

And VIX has been under 10 only during period episodes such as December 1993, May-July 2017 and Nov-Dec 2006.

vixunder10

Let’s see what Janet and the FOMC do over the next twelve months and how that impacts VIX.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s