BBVA Research | Covi-19 jolts equities and sovereign yields again as mounting coronavirus cases outside China dashed hopes that the outbreak had been contained. U.S. Treasury 10Yyield hit historic lows, dropping below 1.30%. Elsewhere, the WHO stated that the covid-19 has the potential to become a pandemic, while the U.S. warned not to travel to Spain to avoid potential dangers.
Nobody really knows why volatility has disappeared. In theory, there are more than enough reasons for the market to be nervous, and for investors to take advantage of this to obtain higher returns.
The Chicago Board Options Exchange Volatility Index (VIX) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices….