Volatility Hits Another All-Time Low as Fear All but Vanishes

VIX Fear IndexThe largest ETF measuring volatility, the iPath S&P 500 VIX Short Term Futures TM ETN (NYSE:VXX), hit a new all-time low this morning as the markets signal a complete lack of fear amongst the investing public.

The VXX fell all the way to $10.24 today, a new low for the ETF that’s been around since 2013:

VXX-2016-07-29

VXX is tied to the VIX, the so-called “fear gauge” that measures implied volatility within the S&P 500. The VIX itself recently traded around 12.32, compared to its historical average of 19.79. The VIX’s all-time closing low is 10.42, and was set in January 2007.

So what’s causing the end of volatility as we know it? The consensus seems to be that investors are paralyzed by:

  • Extremely dovish policy around the globe,
  • The recent Brexit crisis, and
  • People waiting to place bets until the presidential election.

A final possibility is that volatility simply ain’t what it used to be. What if the markets are just so dominated by automated trading programs that humans’ propensity for fear is all but gone from the equation?

The VXX fell $0.27 (-2.56%) to $10.28 per share in Friday afternoon trading.

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