The recent escalation of tariffs by the United States, particularly targeting Colombia, has heightened fears of retaliatory measures and increased volatility in the financial markets. Emerging market currencies, including the Mexican and Colombian pesos, have depreciated as investors anticipate negative impacts on trade balances and economic growth. The uncertainty surrounding these tariffs has led to a risk-off sentiment, with investors seeking safer assets amid concerns over potential inflationary pressures and disruptions to global supply chains.
The heightened volatility is reflected in the VIX, often referred to as the "fear gauge," which measures market expectations of near-term volatility. The VIX has surged, indicating increased investor anxiety as global trade tensions rise. As of 13:31 on January 27, the VIX stands at 18.80, up significantly from its last close of 14.85, with an intraday high of 22.51. This spike underscores the market's sensitivity to geopolitical developments and the potential for further economic policy shifts.