Why is market volatility so low?

Ignoring the odd blip, market volatility continues to trend lower. Is it merely investor complacency, or is there a more rational explanation? And would volatility remain low even in the event of US recession?

What do you do when you have just finished writing an article about the continuous downtrend in stock market volatility only for it to explode before you have published your work? Do you pretend nothing has happened? Do you bin the article? Or do you, as we have chosen to do, conclude that the spike in volatility is temporary and that we will soon revert to the norm of recent months and years?

As we interpret events, nothing fundamentally has changed in the last week. In other words, the so-called drama around the world is more likely a long overdue reaction to months of relentless appreciation in global stock markets.

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