Wall Street’s main volatility index has dipped below the 10 mark for the first time since early August, as markets simmer down from bouts of nervousness triggered by North Korea.
The Vix index, which measures the short-term volatility implied by S&P 500 option prices, has been unusually subdued for most of 2017, raising eyebrows and stirring up concerns that investors are too complacent given the global economic and political backdrop.
Fears over North Korea’s nuclear programme and the US’s increasingly bellicose response, caused a series of modest but notable stock market sell-offs in August, at one point lifting the Vix index to a 10-month high. But those fears have receded and investors last week pushed the US stock market to a new record high.
Although Bank of America’s survey of investors indicate that fund managers are buying protection against stock market drops, the Vix index dipped to as low as 9.88 on Monday, and was trading at 10.09 at pixel time. Over the long run the index has averaged about 20.
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