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Vix Poses Biggest Weekly Reversal on Record: Don't Discount Another Rebound Soon

Published 08/19/2024, 02:28 AM
USD/JPY
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VIX
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The round trip in stocks so far this month was perhaps best described by my friend Peter.

Peter Atwater Tweet

As measured by the VIX Index, we just witnessed the most extreme stock market swing on record.

History of VIX Spikes

To some degree, the decline in stocks at the start of the month was driven by the unwind of the yen carry trade.

Yen Carry Trade and AI Bubble

Traders rushing back into those leveraged positions this week helped to drive the rebound.

Jesse Felder Tweet

However, history suggests these episodes are rarely so straightforward.

USD/JPY Chart

Moreover, the monetary cycle suggests this could be just the beginning of a prolonged period of rising volatility.

Fed Tightening

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