The prospect of the U.S. defaulting on its debts, which could happen if Congress can't reach an agreement to lift the debt ceiling later this week, doesn't seem to have had a huge effect on the stock markets yet. The S&P 500 is up 1.7 percent for October, through yesterday's close. That's very good for half a month.
But we can see some turmoil lurking underneath. The second-most-traded ETF in the market yesterday was the iPath S&P 500 VIX Short-Term Futures ETN, which tracks the market's volatility. (The most-traded ETF, as it almost always is, was the SPDR S&P 500 ETF.) Traders are apparently hedging their bets against higher market volatility in the very near future.
After spiking early last week, the VIX volatility measure was actually dropping through the end of the week, when it looked like Congress might reach some sort of agreement on the shutdown and debt-ceiling issues. But for the first two days of this week, it jumped 17 percent.
No comments:
Post a Comment