Traders Brace for Comeback of Volatility

  • Central banks in tightening mode seen as trigger for swings
  • ETPs show traders are more long than short volatility

Merrill Lynch Says Markets Aren't Pricing Anything

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As a much-vaunted Trump reflation trade fizzled and the U.S. president found himself embroiled in controversy, the big market surprise in the first half was that volatility actually fell.

Traders who shorted the VIX saw their bets pay off as the gauge plunged 20 percent, taking its quarterly average to the lowest level since 2006Bloomberg Terminal. The question is, how long can it last?