When volatility spikes to unprecedented levels, the markets recoil quickly at the slightest trigger. The trigger for the recent sharp dip in volatility as seen in the US VIX is the pause in the higher tariffs for 90 days. I’m the interim, reciprocal tariffs shall be capped at 10%. But China alone shall be subjected to a tariff of 125%.
This move resulted in a cooling down on the VIX. But the US bond yields spiked as bond prices crashed. Clearly, the battleground is spreading into the bond markets. Nobody knows what will cool down frayed nerves in the market. The coming weeks will matter the most. The contagion must be contained. Confidence of global investors needs to be restored effectively in every market. India must quickly strike it’s bilateral trade treaty with the USA.
Fast paced global developments will continue to haunt the markets. But, opportunities will definitely present themselves in times like now. It is up to every investor to build himself, scale up his portfolio, and achieve his financial freedom faster than he imagined.