The VS TR 2x Long VIX Futures ETF (UVIX) is experiencing a notable uptick, driven by heightened market volatility expectations. The underlying VVIX index, which measures the volatility of volatility, surged by 6.12% as of January 2, 2025. This increase is largely attributed to a combination of factors, including disappointing economic data from Asia and recent central bank actions. Asian markets started the year on a weak footing, with Chinese stocks declining due to a lackluster PMI report and Japan grappling with mixed economic forecasts. These developments have contributed to a risk-off sentiment, prompting investors to seek protection against potential market downturns, thereby boosting demand for volatility-related instruments.
Additionally, the recent Federal Open Market Committee (FOMC) meeting, which concluded with a 25 basis point rate cut and a signal of fewer rate cuts in 2025, has added to market uncertainty. The decision led to a decline in major US indices, further fueling volatility expectations. As investors digest these macroeconomic signals, the demand for hedging against market fluctuations has intensified, reflected in the rising VVIX index.
The UVIX ETF rose to $3.71, marking a 9.12% increase from its previous close.