• Global markets fell on Thursday as geopolitical tensions flared between the United States and North Korea. Stocks on Thursday faced their largest decline since March and marked the end of what was a historic run of low volatility within the domestic equity markets.
  • Major measures of volatility within the equity and fixed income markets have trended lower in 2017, yet recent weeks’ activity put an exclamation point on the broader trend. For example, the S&P 500 Index just completed 15 consecutive days, from July 20 through August 9, in which daily total returns were within 0.3% (either positive or negative).1
  • Never before has the U.S. stock market remained within such a tight trading range for such a long time.1 In fact, the S&P 500 Index has not experienced a move of 2% or more in 2017, another rarity this late into a calendar year.1
  • Of course, volatility is cyclical and, while it has remained constrained in 2017, it can’t last at such extreme lows, or highs, forever. Since 1990, the long-term average value of the Chicago Board Options Exchange (CBOE) Volatility Index, or VIX Index, is 19.5.2
  • As we saw this week, however, any number of events, market or geopolitical, could reverse the years-long trend of declining volatility. It is in market environments like today’s, when equity indexes remain near all-time highs and bond yields near cyclical lows, that investors may consider preparing for volatility to increase once again.


1 Bloomberg, as of August 11, 2017.
2 Bloomberg, based on the average VIX level from January 1990 through August 10, 2017. The VIX Index measures expected equity volatility.



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