Geopolitical uncertainty continues to weigh heavily on the markets, with recent tariff delays on Mexico and Canada offering only temporary relief. Despite a more neutral gamma profile for the S&P 500, which suggests reduced dealer hedging needs, implied volatility remains elevated. This is reflected in the VIX, which has seen a decline as of late, indicating a slight easing in market volatility. However, the persistent policy uncertainty under the current administration keeps investors on edge, as they remain focused on political developments rather than traditional economic indicators. The Fed's patient stance amid fiscal policy unpredictability has further shifted attention away from economic data, capping risk sentiment and suppressing aggressive positioning in equities.
The ProShares Trust Ultra VIX Short Term Futures ETF (UVXY) experienced a decline, dropping 3.46% to $19.25 at 11:00 AM on Tuesday, February 4.