VIX, an indicator of volatility in the U.S. stock market, recorded 19.9, entering a stable period fo..

VIX, an indicator of volatility in the U.S. stock market, recorded 19.9, entering a stable period for the first time since the end of last month. The VIX determines the fear and stability of the market with the boundary of 20.

On the 19th (local time), the VIX closed at 19.9, down 1.8 from the previous day on the Chicago Option Exchange. VIX hit 27.8 on the 10th, a new high for the year, but has since entered a gradual downward trend.

The VIX has been above 20 for the last three days. The VIX reflects market volatility expectations for the S&P 500 index options over the next 30 days.

The volatility of the New York Stock Exchange was reduced when the U.S. Federal Open Market Committee (FOMC) froze the benchmark interest rate as a market expectation and hinted at a rate cut twice (50bp) within this year.

Federal Reserve Chairman Jerome Powell led the S&P 500 index (1.08%), Nasdaq composite (1.41%) and Dow (0.92%) by making remarks that quelled market concerns, such as “the U.S. economy is strong” and “inflation due to tariffs will be transitory.”

Baek Seok-hyun, a researcher at Shinhan Bank, said, “FOMC told me what the market wanted to hear,” adding, “As the market responded, the three major U.S. indexes rebounded to around 1%.

Some suggested paying attention to the VIX futures market to see signs of a future rebound in the U.S. stock market.

Park Hyun-jung, an ETF researcher at Daishin Securities, said, “We should pay attention to the time when the VIX futures market shifts from backwardation to contango,” adding, “The S&P 500 often rebounded a month after the contango transition.”

Backwardation in the futures market refers to cases where spot is more expensive than futures, and contango refers to cases where spot is cheaper than futures.

Normally, the market sets a higher volatility in the future than it is now, so VIX futures stay in contango.

However, in March, VIX futures entered a backwardation state as market fears spread due to uncertain tariff policies.

The futures for the month of June VIX were 19.55, which is 0.35 lower than the spot VIX. Compared to the gap (6.5) on the 10th, when the VIX peaked, it has narrowed a lot.

Researcher Park emphasized, “Since COVID-19, VIX backwardation has lasted more than five trading days,” and “five of them have succeeded in rebounding a month after the conversion to contango.”