Investors are closely watching today's US Consumer Price Index (CPI) data, which could significantly impact market volatility. Despite the current low implied reaction to the CPI data, as noted by Bank of America derivatives strategists, any deviation from expectations could shift market dynamics. A cooler-than-expected CPI reading might support a late December rally, while a hotter print could reignite volatility. The current economic backdrop of a resilient economy and falling inflation has been favorable for equities, but potential inflationary pressures from new tariffs and fiscal policies could disrupt this trend, leading to higher interest rates and impacting asset valuations.
The iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) experienced a slight decline, dropping 0.59% to $42.21 as of 07:00 AM on Wednesday, December 11.