The market's reaction to dovish comments from Federal Reserve Governor Christopher Waller, hinting at potential rate cuts, has contributed to increased volatility, as evidenced by the 2.98% rise in the CBOE Volatility Index (VIX) to 16.60. This uptick in the VIX suggests heightened market uncertainty, with expectations of approximately 1% daily movements in the S&P 500 over the next 30 days. The increased volatility is further fueled by a strong dollar and rising import prices, prompting investors to seek safe-haven assets like gold. The significant trading activity in VIX options, particularly the VIX Feb 2025 19.000 call, indicates a growing demand for protection against potential market downturns.
The ProShares Trust Ultra VIX Short Term Futures ETF (UVXY) saw a modest increase, rising 0.78% to $19.30 as of 16:40 on Thursday, January 16.