The CBOE Volatility Index (VIX) experienced a notable decline as recent data revealed a slowdown in core inflation, fueling expectations for potential Federal Reserve rate cuts this year. The core consumer price index's 0.2% increase for December marked the first deceleration in six months, alleviating fears of aggressive monetary tightening. This shift in sentiment has led to a rally in US equities and a drop in Treasury yields, reflecting investor optimism about a more accommodative monetary policy environment. The market's positive response to the inflation data has also weakened the dollar, boosting demand for equities and speculative assets.
The ProShares Trust Ultra VIX Short Term Futures ETF (UVXY) closed at $19.15, down 12.16% from the previous close of $21.80, and is currently trading at $19.29, reflecting a 0.73% increase since market close.