Implied Correlation Index News Today

US stock market faces the risk of an impending multi-week correction due to a potential resurgence of goods-based inflationary pressure.

The US stock market continued to hit another milestone last week when the benchmark S&P 500 recorded 14 weekly gains in the past 15 weeks as of 9 February 2024, its longest winning streak since 1972.

After stellar Q4 quarterly and 2023 annual performances of 11.24% and 24.23% respectively, the US S&P 500 has started 2024 on a lacklustre footing, in the past two and half weeks, it has recorded an accumulated loss of -0.64% at this time of the writing after missing just a whisker to retest its all-time high of 4,818 set on 4 January 2022 with an intraday high of 4,802 printed on last Friday, 12 January 2024.

A pull-back from easing liquidity conditions & low correlation among S&P 500 constituents may trigger a spike in implied volatility (VIX)

When bond yields rise, the opportunity cost of capital committed to equities rises, and therefore, the expected return on equities decreases. As a result, equities command lower valuations.

US S&P 500 and global equities may see a spike in volatility due to higher sovereign bond yields and prior 6 months of elevated optimism

The eight new indices complement the exchange groups existing three-month Implied Correlation Index.