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VIX Surges as Fed Caution and Strong Retail Sales Amplify Market Uncertainty

By Samir El Khoury

The VIX Fear and Volatility Index, reflecting investors’ anticipated stock market price movements, increased from 11.81 points to around 15.40 points yesterday. This marks its highest level since November 10, 2023, suggesting heightened turmoil and investor unease in the US stock markets.

 

This noticeable increase is due to several factors, the most prominent of which are:

  • Cautious statements by some Fed members, specifically by Christopher Waller, who confirmed that he saw no reason to reduce interest rates at a rapid pace, as happened in previous easing periods, and added that the easing process must be conducted systematically and carefully when the time becomes appropriate to engage in it.
  • Core retail sales increased on a monthly basis in the United States of America yesterday, recording a growth of 0.4%, which is a percentage that exceeded expectations and the previous reading (0.2%), which prompts the Federal Reserve to maintain its tight monetary policy for a longer period, that is, to maintain high interest rates for a longer period of time.
  • An increase in long-term and short-term US Treasury bond yields, as the two-year bond yield recorded 4.37%, and the ten-year bond yield recorded 4.13%, which is its highest level since December 13, 2023.
  • The US Dollar Index, which measures the performance of the dollar against a basket of six major currencies, rose to 103.69 points yesterday, its highest level since December 13, 2023, putting pressure on the S&P 500 Index.

 

It is worth noting that the markets have reduced their bets on interest rate cuts in the United States of America, as they are currently pricing in a probability of about 60% for an interest rate cut in March 2024.

Regarding the technical aspect, according to Fibonacci, there is a possibility that the VIX will rise to levels of 16.14 points (38.20%), 17.48 (50%), and 18.83 (61.80%).

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.

Taurex is the trading name of Zenfinex Global Limited, Stochastic Africa SL Ltd, Zenfinex Global LLC, and Zenfinex Limited.

Zenfinex Global Limited is registered in the Republic of Seychelles with registration number: 8428731-1 and is regulated by the Financial Services Authority of Seychelles (license number SD092). Its registered office address is F20, 1st Floor, Eden Plaza, Eden Island, Seychelles.

Stochastic Africa (SL) Limited is a company registered in Sierra Leone with Company Number: SL270319STOCH05271 and is licensed by the Bank of Sierra Leone under license number BSL/SAL/2023 and with the registered office at 148D Wilkinson Road, Freetown, Sierra Leone.

Zenfinex Global LLC is a company registered with the Financial Services Authority in Saint Vincent and the Grenadines under registered number 138 LLC 2019. Its registered office is Hinds Building, Kingstown, Saint Vincent, and the Grenadines.

Zenfinex Limited is a company registered in England and Wales under registered number: 11077380. Authorised and regulated by the Financial Conduct Authority under firm reference number 816055. Its registered office is 4th Floor, 4 Eastcheap, London, EC3M 1AE, United Kingdom.

*All trading involves risk.

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