The recent cooling in US core inflation data has significantly impacted market sentiment, leading to a notable decline in the CBOE Volatility Index (VIX). The 0.2% increase in the core consumer price index for December has eased fears of aggressive Federal Reserve rate hikes, sparking a rally in US equities and a drop in Treasury yields. This shift in sentiment has been further bolstered by a weakened dollar, which has increased demand for equities and speculative assets. The S&P 500 and Nasdaq 100 have both posted significant gains, reflecting investor optimism for a more accommodative monetary policy environment.
The iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) experienced a sharp decline, closing at $43.55, down 8.16% from the previous close of $47.42.