Vol is up

The center of attention continues to be the conflict on Iran. The US bombed yesterday Kharg island, a major oil infrastructure hub for Iran, and Iran continues to attack Israel, and Israel continues to attack the south of Lebanon where Hezbollah is located, which in turn continues to attack Israel. It does not look like the conflict wil be scaling down any time soon. In fact, the Sansom option, Israel’s unofficial, undeclared nuclear doctrine referring to a strategy of massive nuclear retaliation as a last resort if the country faces an existential threat or imminent destruction, is getting unofficially popular. Markets are still relatively calm on the surface, but if you look at the charts below, you will be able to see that volatility on major asset classes is goin up. The top chart below, shows volatility and skew fo West Texas Oil, the middle chart, shows the MOVE index, or the volatility of the bond market, and the lower one, shows the VIX, or the S&P500 volatility index. Perhaps that’s why the Trump administration attacks on weekends, to give the market some time to digest the news, and despite that fact, the spikes are real. We’re still too close to All time highs, which makes these spikes relevant. Official rethoric keeps saying the conflict is almost over, but volatility indices say otherwise.

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