home stretch
In the home stretch of the US Presidential Election, stocks churned just below all time highs in October as rising hedging demand was evident in the inverted VIX futures curve (chart). Judging by pricing in contracts after Nov 5th, worry this election season was not just about the outcome, but also the process itself (ie, a contested election). With a decisive outcome wiping this scenario away, volatility in the early days of November has retreated sharply as markets snap to all time highs.
VIX futures curves, 10/31/24 and 11/6/24. Source: vixcentral.com
Heading into the historically bullish holiday season with only a Fed meeting and a handful of economic reports remaining as obvious catalysts, VIX pricing is quickly moving toward a bullish configuration for markets though the balance of the year. As always, new information can change this perspective but for now, “risk on” conditions are in place.