Election hedging is causing a 'kink' in the volatility market

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Investment Strategy Nouvelles

Markets,CBOE Volatility Index,Donald Trump

The Vix futures curve shows a sharp jump later this year, around the time of the presidential election.

Traders are gearing up for an increase in volatility around the November elections in the United States, according to one market indicator. Stacey Gilbert, CIO of Glenmede Investment Management, said that the futures market for the Cboe Volatility Index is showing a distortion around the November election. "You can see a real kink in the curve there that wasn't there for other years. ...

But the race could begin to emerge as a major focus soon, with the first debate scheduled on Thursday. The curve is not the only sign that investors are uncomfortable about the election. An increasing share of fund managers, some 16%, said that the U.S. election was the biggest tail risk to the market, according to the Bank of America fund manager survey — up from 9% in May. The election typically is something of a turning point for markets, according to Ed Clissold, chief U.S.

 

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