A generalized calm has taken over the asset classes while the merchants look forward to the Federal Reserve (Fed) President Jerome Powell’s speech in Jackson Hole’s annual symposium, scheduled for August 21 to 23.
Bitcoin (BTC) The implicit volatility of 30 days, measured by the DVOL index of Bvvvv and Volmex’s detrib, has declined sharply in recent months, around minimum of two years of around 36% last week, according to TrainingView data.
Similarly, the CME gold volatility index (GVZ)that estimates the expected volatility of the yields of the 30 days for the ETF of the actions of SPDR Gold (GLD)More than half has been reduced in the last four months, falling to 15.22%, its lowest level since January.
The movement index, which tracks the implicit volatility of 30 days from the treasure notes, has also decreased in recent months, reaching a minimum of 3.5 years of 76%.
Meanwhile, the Vix, widely considered as the “caliber of fear” of Wall Street, fell below 14% last week, decreased substantially from its maximum of April about 45%. A similar Vol compression is observed in FX specialties, such as EUR/USD.
The rates are ‘still high’
The sliding pronounced in the volatility in the main assets occurs when the central banks are expected to, particularly the Fed, deliver rates cuts from restrictive territory, instead of in the middle of a crisis.
“The majority of important economies are not facilitated from ultra low or emergency levels as we saw after the financial or during Covid. They are reducing the restrictive territory, which means that rates are still high enough to slowly growth, and in many cases, real rates, adjusted for inflation, remain positive. That is a great change in the duration of the cycles Phase of the next phase, explain the phase of the next phase of the phase of the next phase.
According to the Fedwatch of the CME tool, the Fed is expected to reduce the rates at 25 basic points in September, resuming the flexion cycle after an eight -month pause. The JPMorgan investment bank giant hopes that the reference loan taking cost to 3.25%-3.5%at the end of the first quarter of 2026, a decrease of 100 base of current 4.25%.
According to some observers, Powell could lay the foundations for fresh flexibility during this speech by Jackson Hole.
“The road to rates cuts can be unequal, as we have seen in the last two years, where markets have been anxious for tariffs and sometimes disappointed that the Fed has not delivered them. But we believe that the address of trips for tariffs Blog on Friday.
“With inflation stepping on water and labor market strains become more pronounced, the risk balance can soon lean towards action. The next comments of President Powell in Jackson Hole could validate the expectations now high that, after a seven -month pause, the tariff cuts will resume in September,” Jones added.
In other words, the decrease in volatility between assets classes probably reflects expectations for easy monetary policy and economic stability.
Mercades too complicating?
However, opposites can see it as a sign that the markets are too complacent, since the commercial tariffs of President Donald Trump threaten to weigh economic growth, and the latest data point to sticky inflation.
Simply take a look at price levels for most assets, including BTC and Gold: all are at maximum record.
Scott Bauer de Prosper Trading Academy argued last week during an interview with Schwab Network that volatility is too low after the recent round of economic data, with more uncertainty on the horizon.
The argument for market complacency wins credit when seen in the context of bond markets, where corporate bond differentials reached their lowest since 2007. That led Goldman Sachs analysts to warn customers against complacency and take hedges.
“There are sufficient sources of downward risks to justify maintaining some coverage in the wallets,” Goldman’s strategists run by Lotfi Karoui wrote in a note dated July 31, according to Bloomberg.
“Growth might surprise even more towards the inconvenience,” uninflationary pressures could fade or renewed concerns about fed independence can feed a large sale of long -date yields.
In any case, volatility is a medium reversal, which means that periods of low volatility generally prepare the scenario for a return to more turbulent conditions.
