Fear Gauge Rises Again

After a relatively drama-free stock market for the last several months, the new standoff between the US and China has escalated investors’ fears to a heightened level. This week, the Chicago Board Options Exchange Volatility Index, or VIX, traded above 22.7, well above the long-term average just below 20.

The VIX is seen as a measuring stick for how worried investors are about the possibility of a stock selloff. It is based on S&P 500 index options for 30 days following the measurement date and is often referred to as the fear gauge.

With US/China trade issues being far from finding any sort of common ground, the market seems to be bracing for more turbulence to come. Treasury bond yields, usually a haven when investors worry, were down again. The 10-yr dipped below 4% briefly ⁽¹⁾, and the 30-yr dropped to 4.59% ⁽²⁾, as I write, both down 10 basis points since Oct 1st.