Yesterday, the CBOE SPX Volatility Index ([VIX]) dropped to 12 on its 1-point chart to reach its lowest reading since January 2020.

Yesterday, the CBOE SPX Volatility Index (VIX) dropped to 12 on its 1-point chart, reaching its lowest reading since January 2020. After reaching 23 in late October, the VIX has been cut in half in just a month and a half. On the other hand, bond market volatility remains historically elevated, as seen by the ICE BofA MOVE Index (MLMOVE). The MOVE Index can be considered the VIX for treasury bonds and has a current reading of 125 on its 5-point chart which is well above its January 2020 level of 50. The dislocation between bond and equity volatility is staggering as the two have often moved similarly although not identically. The end-of-the-year period is one that is typically accompanied by low volatility, so it would not be surprising to see equity volatility remain compressed for the rest of the year. For those who can use options, now would be a good time to consider purchasing puts as portfolio insurance for risk-averse clients. With low volatility, puts are cheap especially relative to the last few years. Otherwise, the market seems confident that there is a lack of any major concerns given the level of implied volatility in the equity market.