The odds of a Federal Reserve interest rate hike in September jumped to nearly 60% after Kevin Warsh’s speech in Jackson Hole, compared to 35% the day before. Paradoxically, the VIX volatility index fell to 14.1, its lowest level this year, suggesting stock traders are accepting this hawkish outlook. The S&P 500 declined only 0.3% despite options pricing implying a 60 basis point range for the session. Bitcoin and gold each lost at least 2.5%, confirming that investors across asset classes are preparing for higher rates. The spread between six-month and one-month S&P 500 options stands at the 96th percentile over the past year, indicating the impact on longer-term volatility may materialize in the coming months.
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