Investors are closely watching today's US Consumer Price Index (CPI) data, which could significantly impact market volatility. Bank of America derivatives strategists have noted that the options market is pricing in the smallest implied reaction to CPI data since 2021, indicating a level of complacency among traders. This comes amid a backdrop of a resilient economy, falling inflation, and rate cuts, which have been favorable for equities. However, potential inflationary pressures from new tariffs and expansionist fiscal policies could disrupt this environment, leading to higher interest rates and impacting equity valuations and bond prices. The CBOE Volatility Index (VIX) is slightly above its last close, reflecting the market's cautious stance ahead of the CPI release.
The ProShares Trust Ultra VIX Short Term Futures ETF (UVXY) experienced a slight decline, dropping 1.3% to $19.00 as of 07:00 AM on Wednesday, December 11.