US Shutdown Will Increase Volatility Premiums

U.S. stocks are likely to face another week of rising turbulence as efforts to settle the budget dispute in Washington drag on, leaving investors worried about the more critical issue of raising the U.S. debt ceiling.

The budget impasse has led to a partial U.S. government shutdown for the past four days, already longer than many investors had expected.

While stocks ended higher on Friday, the S&P 500 posted a loss for the week and the CBOE Volatility index — the market’s fear index — rose to 16.89, up from 13.12 on Sept. 20. The index is still at relatively low levels, but options-market trading suggests investors are starting to guard against increased volatility.

via CNBC

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