Volatility Snapshot: Looking Past Tax Reform
Another extremely quiet session today, with the VIX settling at 10.11 and contango resting at 13.66%.
An uneasy feeling has been building looking at the SPX over the past week. Should tax reform pass by Christmas, our gut tells us that a selloff of 1-5% will arrive in early January. Looking past tax reform, the market may soon acknowledge the collapsing yield curve and the Feds increasingly hawkish stance.
We would welcome increased volatility next year and expect the record low vol levels will not be repeated in 2018.
We continue to sit in cash waiting for an opportunity, but as we stated above we feel a VIX spike is not too far off.