The recent escalation of tariffs by the United States, particularly targeting Colombia, has intensified fears of retaliatory measures, leading to increased volatility in financial markets. This has resulted in a depreciation of emerging market currencies, such as the Mexican and Colombian pesos, as investors brace for potential negative impacts on trade balances and economic growth. The uncertainty surrounding these tariffs has fostered a risk-off sentiment, prompting investors to seek safer assets amid concerns over potential inflationary pressures and disruptions to global supply chains. The heightened volatility is evident in the VIX, which has surged as global trade tensions rise, reflecting increased investor anxiety.
The ProShares Short VIX Short Term Futures ETF (SVXY) experienced a significant decline, dropping 4.39% to $49.82 at 13:40 on Monday, January 27.