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TME on the new chase.
The volatility trap
From panic to FOMO in less than a week. VIX has collapsed from 28 to 20, short-dated hedges have been crushed and the very flows that amplified the selloff are now helping fuel the rebound. Dealer hedging, vol-control strategies and leveraged ETFs are increasingly dictating market direction. Yet beneath the volatility collapse, Nomura warns that underlying instability remains extreme, with realized VVIX volatility hitting record levels. The panic is gone, but the fragility isn’t. Welcome to the volatility trap.
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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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