The stock market has been calm, but that can’t last much longer.
has gained almost 10% from its lowest close of the year, set in early October. Accompanying that has been a
Cboe Volatility Index
(VIX), which measures the extent of expected swings in stock prices, at the 21 level, close to its low for the second half of the year. To be sure, that’s fairly elevated, historically speaking, as the VIX was often below 15 for the post-financial crisis era. Still, 20 isn’t as high as it could go, as it has gone into the mid-30s several times this year. Enabling the calm has been hope that the Federal Reserve will slow down the pace of rate hikes, which threaten to put the economy into a recession; hikes are designed to dent demand in order to reduce the rate of inflation.