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U.S. Stock Market Volatility at Lowest in Over 50 Years

11 months ago15 views

Investing.com - The 12 months since Donald Trump’s shock U.S. presidential election victory has seen the lowest volatility in the U.S. stock market in over 50 years. Since the election, the average daily change in the S&P 500 has been around just 0.3% as the index has set new record highs. It is the lowest daily change in more than 50 years. As well as the low level of volatility in the S&P 500, some investors have also hedged against future volatility, indicating that they are not particularly concerned that it will increase. The CBOE’s implied volatility index, also known as the Vix, hit its lowest intraday level in July and still remains close to that level. Over the past year, the exchange-traded fund offered by BlackRock that mimics the result of selling the Vix has risen by around 200%. The International Monetary Fund estimates that assets invested in volatility targeting strategies have risen to about $500bn, with this amount increasing by more than half over the past three years. The fund warned last month that the increasing use of financial products tied to equity volatility is creating unknown risks that could result in a severe shock to financial markets.

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