Omnipresent calm has seized active lessons while traders are looking forward to the federal reserve (Fed) President Jerome Powell’s speech at the Jackson Hole annual symposium, scheduled for August 21 to 23.
Bitcoin (BTC) The implicit volatility of 30 days, as measured by the Volmex and Deribit Dvoli index, has decreased sharply in recent months, oscillating almost two years by around 36% last week, according to tradingView data.
Likewise, the volatility index of gold CME (GVZ)who estimates the expected volatility of 30 -day yields for the SPDR Gold Shares Etf (GLD)More than divided by two in the last four months, falling to 15.22% – at its lowest level since January.
The displacement index, which follows the implicit volatility of 30 days of cash tickets, has also decreased in recent months, reaching a lower 76% of 3.5 years.
Meanwhile, the VIX, widely considered as “Fear Gauge” by Wall Street, fell below 14% last week, decreasing considerably from its peaks in early April almost 45%. Similar flight compression is observed in FX majors such as EUR / USD.
The prices are “still high”
The pronounced slide of volatility between the main assets intervenes while central banks, in particular the Fed, should carry out rate reductions in the restrictive territory, rather than in a crisis.
“Most major economies do not relax ultra-basic or emergency levels as we saw after the financial crisis or during the cocheal. They cut from a restrictive territory, which means that rates are still high enough for slow growth, and in many cases, real prices, adjusted for inflation, are always positive. cryptocurrencies and stock markets.
According to the Fedwatch tool of the CME, the Fed should reduce the rates of 25 base points in September, taking up the softening cycle after an eight month break. The JPMorgan investment bank giant expects the reference loan cost to 3.25% to 3.5% by the end of the first quarter of 2026, a decrease of 100 basic points compared to the current 4.25%.
According to some observers, Powell could lay the foundations for a new relief during this Jackson hole speech.
“The route of rate reductions can be uneven, as we have seen in the past two years, where the markets have been impatient to reduce rates and sometimes disappointed that the Fed has not delivered them. But we believe that travel management for prices is likely to remain lower,” Angelo Kourkafas, a main global investment strategist, said on Friday.
“With the inflation that traversed water and the strains of the labor market increasingly pronounced, the risk balance could soon advance the action. The upcoming remarks of President Powell in Jackson Hole could validate the now high expectations.
In other words, the drop in volatility between asset classes probably reflects the expectations of an easy monetary policy and economic stability.
The too complacent markets?
However, opposites may consider the sign that the markets are too complacent, because the trade rates of President Donald Trump threaten to weigh on economic growth, and the latest data indicate sticky inflation.
Take a look at the price levels of most of the assets, including BTC and Gold: they are all at record heights.
Scott Bauer by Prosper Trading Academy argued last week during an interview with Schwab Network that volatility is too low following the recent series of economic data, with more uncertainty on the horizon.
The argument in terms of market convenience gains credibility when it is seen in the context of bond markets, where corporate bonds have reached their lowest since 2007.
“There are enough sources of risk down to justify keeping certain hedges in wallets,” according to Bloomberg, Goldman strategists led by Lotfi Karoui dated July 31.
“Growth could surprise more downwards”, the pressures arranged by speech could fade or renewed concerns concerning the independence of the Fed could feed a strong sale in long -term yields.
In all cases, volatility is an average reduction, which means that low volatility periods have generally prepared the ground for a return to more turbulent conditions.
