A pervasive tranquility has taken hold of asset classes as dealers look forward to Federal Reserve (Fat) Chairman Jerome Powell’s speech at the annual Jackson Hole Symposium, scheduled for 21-23. August.
Bitcoin’s (BTC) 30-day implicit volatility, measured by Volmex’s BVIV and Deribit’s DVOL index, has dropped sharply in recent months and hovered near two years of lowness of about 36% last week, according to TradingView data.
Similarly CME GOLD VOLATILITY INDEX (Gvz)which estimates the expected 30-day volatility of returns for SPDR Gold shares ETF (GLD)has more than halved over the past four months, dropped to 15.22% – it’s the lowest level since January.
The moving index, which tracks the 30-day implicit volatility in the Treasury, has also decreased in recent months and reached a 3.5-year low of 76%.
Meanwhile, VIX, who is largely considered Wall Street “fear gauge”, less than 14% last week, essentially from the early April heights of near 45%. A similar Vol Competation is seen in eg -Majors, such as EUR/USD.
Prices are ‘still high’
The pronounced slide in volatility across larger assets comes, as central banks, especially bold, are expected to deliver rate cuts from restrictive territory rather than in the midst of a crisis.
“Most major economies do not facilitate ultra-low or emergency levels that we saw after the financial crisis or under Covid. They cut from restrictive territory, which means the bull runs in all assets, including cryptocurrencies and stock markets.
According to CME’s FedWatch tool, Fed is expected to reduce the rates by 25 basic points in September, which resumes the easing cycle after an eight-month break. Investment bank giant JPMorgan expects the benchmark borrowing costs to fall to 3.25%-3.5%by the end of the first quarter of 2026, a decrease of 100 basic point from the current 4.25%.
In some observers, Powell could lay the foundation for fresh relief during this Jackson Hole speech.
“The road to tight cuts can be uneven, as we have seen in the last two years, with the markets being eager for tight cuts and sometimes disappointed that Fed has not delivered them. But we believe the direction of rates will probably remain lower,” said Angelo Kourkafas, a senior global investment strategist at Edward Jones, in a blog post on Friday.
“With inflation that draws water and labor market tribes that are becoming more pronounced, the balance between risks can soon tip against action. President Powell’s upcoming comments on Jackson Hole could validate the now high expectations that, after a seven-month break, the rates will be resumed in September,” Jones added.
In other words, the decrease in volatility across asset classes is likely to be the expectations of easy monetary policy and financial stability.
Markets for self -satisfaction?
However, Contrarians may see it as a sign that markets are too complacent as President Donald Trump’s trading bariffer threatens to weigh economic growth, and the latest data points to sticky inflation.
Just look at the price levels for most assets, including BTC and gold: They are all at record heights.
Last week, Prosper Trading Academy’s Scott Bauer argued during an interview with Schwab Network that volatility is too low after the recent round of financial data, with more uncertainty on the horizon.
The argument for the market’s complacency causes credibility when seen on the basis of the bond markets, where corporate bonds spread to hit their lowest since 2007. It caused analysts at Goldman Sachs to warn clients against self -satisfaction and take hedges.
“There are probably sources of downward risks to guarantee to hold some hedges in portfolios,” wrote Goldman strategies led by Lotfi Karoui in a note dated July 31, according to Bloomberg.
“Growth could surprise further downward,” U-Inflationary pressure may fade or renewed concerns over fed independence can burn a sharp sale for long dated yields.
In any case, volatility is average, which means that periods of low volatility typically set the stage for a return to more turbulent conditions.
