SINGAPORE (Feb 25): Positive news flow on the ongoing US-China trade talks continued to buoy sentiment for global stocks over the past week. Following reported progress after days of negotiations in Beijing, further discussions have resumed in the US. Clearly, markets have now priced in some sort of deal to avert another tariff hike or, at the very least, an extension to the March 1 deadline.
Volatility, as measured by the CBOE Volatility Index (VIX), has fallen quite sharply since hitting a high on Christmas Eve last year. That said, many investors remain wary that volatility could return in the near future.
If so, this would not be at all surprising, considering that the global economy is very late in the current upcycle. There are bound to be greater uncertainties over the timing of the turning point. Unemployment rates have fallen far below levels seen in the last recession — US unemployment is near a 50-year low.