Equity volatility subsided, interest-rate volatility shot up

Confidence in equities is returning, but investors fret of inflation

SMARTINMONEY. Equity volatility index (VIX) has slowly subsided and is now down to pre-Lehman levels, a sign that investor confidence is returning.



But as volatility has subsided in equities, it has popped up in debts. The implied volatility of interest-rate swap options has shot up in recent months, indicating that investors are uncertain about long-term interest rates. Ten-year Treasury bond yields have swung between just over 2% and almost 4% since December. Although many countries are experiencing mild deflation, investors fret and rush to protect themselves. Read full article ...