Historic Link Between High-Yield Bond Market and VIX

There has been much consternation over the death of stock market volatility. Some market observers say there is nothing to fear about the CBOE VIX index diving below ten – a historic lack of concern for stock market volatility. Others point to a tight range of the VIX – which is compiled based on put buying and selling in the S&P 500 options – as highlighting dangerous complacency and foreshadowing market downdrafts ahead. Moody’s Chief Economist John Lonski, however, takes a more circumspect view in a research note titled “Much Doubt Surrounds VIX Index’s Optimism.” He links the VIX to…