Group Co.
TRADING THE WEEK: Volatility Returns
Traders Magazine Online News, May 22, 2017
Wait a sec?
Is that? Can it be? Volatility? Why, it's nice to see you again.
In a nutshell the equity trading markets saw a rise in volatility last week as measured by the VIX index, courtesy of President Donald Trump’s campaign’s potential involvement with Russia during the 2016 Presidential election. But as traders said, whatever the cause, the impetus to trade was a welcome break.
According to Nicolas Colas, chief market strategist at Convergex, the VIX is back at its April 18th close at 14.4, coming in last Thursday at 14.8. despite a close below 10 on May 8th and long stretch below 11. The rise on the VIX, while not drastic, still has caused a stir in stocks – particularly technology issues, which would be hit the hardest in a market slump.
Sharon Stark, Managing Director of Fixed Income Strategy at Incapital, also noted the VIX increase and effects on equities. She noted that the Trump administration’s recent internal power struggles have proven to be a distraction to the financial markets, sending equity prices, bond yields and the dollar lower.
“Unfortunately, these come at the cost of any fiscal actions to stimulate the economy and only exacerbate the level of uncertainty with regard to future growth in the U.S,” she noted. “Markets don’t like uncertainty and abhor smoking guns – such the allegation in The New York Times this week that the Trump administration obstructed justice. Whether monitoring the political environment or simply watching the evening news, it is difficult to ignore the spectacle in Washington.”
She added that more volatility could be on tap for this week – ahead of the U.S. Memorial Day holiday weekend. “The week leading up to the Memorial Day holiday may result in more volatile price action with fewer participants as the week draws to a close,” she said.
Trading this week reflected the temporal return of volatility to the market especialy last Wednesday, as volume climbed to 7.12 billion shares from the week prior when volume was 6.67 billion shares, according to Bats Global Markets.
In other market news, according to the first exchange filing of fees for the Consolidated Audit Trail, the sell-side will bear, at least initially, a whopping 75% of the fees associated with running it. In comparison, the exchanges and ATSs share comes to only 25%, with allocations to be made by message traffic for brokers and by volume for venues.
Fees will be charged on a quarterly basis. Each broker or trading venue will receive one invoice for its applicable CAT Fees, not separate invoices if it operates multiple brokerages or trading platforms. The industry will pay its CAT fees to the a central to-be-created company via a centralized system designed solely for the collection of fees as established by CAT operating committee.
For more information on related topics, visit the following channels:
Comments (0)