iPath S&P 500 VIX Short Term Futures TM ETN (NYSEARCA:VXX) performance hanging on upcoming economic results


Dallas, Texas 11/14/2013 (Financialstrend) – The iPath S&P 500 VIX Short Term Futures TM ETN (NYSEARCA:VXX) has lost some of its last month’s return so is the Chicago Board Options Exchange’s (CBOE) Volatility Index, which started falling recently.

Volatility index or a scale to measure the panic in the market has taken a hit after investors are slowly showing some faith in the equities near the end of another eventful year.

Earlier, the U.S. shutdown debacle, contrast opinions among the policy makers, breaching of the debt ceiling coupled with the uncertainty over the tapering of the bond purchase program by the Federal bank has provided strong support to the CBOE VIX to climb higher.

However, with certain visibility over the policy reforms and winding of the asset purchase program, investors retrieved some courage to come back to action in the equities, dragging down the VIX.

Moreover, the lower VIX in recent weeks was also due to the fact that investors were opined with bullish options bet on S&P 500 coupled with the aim of hedging against declines in the broader market.

Additionally, stronger sentiments were boosted by the optimisms over the anticipated better than expected upcoming economic data related to employment and manufacturing along with the Fed’s support to keep things tidy till next month.

However, the skepticisms still surviving over the winding up of bond purchases by the Fed, as many believe that nothing could be certain till Fed actually stops the program. With economy still at bay, these skeptics feels that Fed will continue with the bond purchases. Upcoming economic data will be a key to at least determine the health of the economy on which certain direction of the decision could determined.

Presently, longer-dated VIX futures shows higher volatility to creep in the markets as the difference between the November and October contract grew to its third highest level for this year.