Back-peddling on behalf of President Putin over the situation on the ground in the Ukraine has ushered in a wave of relief amongst investors. Volatility has dipped, yet remains elevated at 14.26 (-10.8%) while the S&P 500 index has jumped 1.3% or 25-points to 1871.
U.S. stocks rose, with the Standard & Poor’s 500 Index rebounding from its biggest loss in a month, as comments from Russian President Vladimir Putin signaled the Ukraine crisis won’t immediately escalate.
Let’s see. Manufacturing in the world’s biggest economy ground to a halt in January. The benchmark Treasury yields is at its lowest in three months and stock indexes can’t hold onto earlier signs of a rally. So then that likely puts the CBOE Volatility Index at a sky high reading of 20.0.
Even after five years of the Fed’s most aggressive accommodative policy in history, there is still a lack of hoped for quality credit creation in the economy, which could be a sign that the greatest deleveraging of the U.S. economy since the Great Depression is still not complete. The Fed’s unrelenting dovish policy appears to support this concern.
The U.S. Federal Reserve decided to withdraw $10 billion from its monthly purchases in spite of the global concerns and the slowdown in emerging markets and that concerned investors are now left “wondering” what the next “shoe to drop” will be.