Volatility set for revival as stimulus peaks, virus flares – Bloomberg

Anil Panchal FXStreet

“The outbreak of a more contagious coronavirus (COVID-19) strain and the prospect of less supportive U.S. monetary policy are pointing to the risk of a choppier path ahead for the equity bull market,” said Bloomberg in its analytical piece published Wednesday.

Even so, the piece highlights increased odds of more equity gains backed by strong vaccination drives. “That mix would mark a shift from the first half, when the Cboe Volatility Index, or VIX, fell to pre-pandemic lows as the S&P 500 jumped 14% on a tide of liquidity,” said Bloomberg.

The analytics also cites the CBOE Skew Index, which tracks the cost of tail-risk equity protection, to hint at the market fears as the gauge stays near record top.

Additionally, comments from Viktor Shvets, head of Asian strategy at Macquarie Capital back the research suggesting an upside grind. “Essentially one should be ready for the high volatility of outcomes, as churning within and between asset classes and styles increases, even if headline indices remain flattish,” mentioned Macquarie’s Shvets as per Bloomberg.

Read: VIX at pre-pandemic levels, summertime volatility possible?

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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