VIX Hit a Decade Low After Fed Issued Statement

February 2, 2017 Share Print 0

Something strange happened to Wall Street’s so-called fear index on Wednesday.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, broke below 10 for less than a minute Wednesday at 2 p.m. ET, right after the Federal Reserve decided to keep interest rates unchanged.

While some experts questioned the significance of the move given its brevity, it did mark the first time since Feb. 16, 2007 that the index fell below 10. Experts who spoke to CNBC said the move could have come as a result of algorithmic glitch or some other anomaly, but it’s very difficult to pinpoint the exact cause.

The Chicago Board Options Exchange, which calculates the Vix, did not immediately respond to CNBC’s request for comment.

The Vix’s sudden move “would imply that at the moment the news broke, bids in the strip or option chain were temporarily pulled due to a large order imbalance,” said Dan Deming, managing director at KKM Financial.
via CNBC

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.