VIX rising and Rates Falling!
By: Ahura Chalki
Market analyst – IFC Markets
Economic data from Europe, China, the UK, and the United States telling us that economic growth is slowing, and our expectation for the second half of 2021 should be lowered. It was also confirmed by Chinese GDP numbers, as in Q2 2021, GDP increased by 7.9%, less than the 8.1% expectation.
Checking the other data, Chinese industrial production in June eased to 8.3% from 8.8%. UK employment rate raised to 4.8% in Jun, more than 4.7% in the last month.
Today’s published data from the United States also for Industrial Production showing just 0.4% Monthly increase in June, much less than 0.7% in May. On an annual scale also US industrial production increased by 9.8%, less than 16.09% of the month before.
On the other hand, the US ten-year Treasury Note falls back to 1.298%, confirming insufficient trust in stock markets, the same reaction that we can see in the VIX chart.
Increasing VIX number is the signal of higher risk in the Market, which usually must be harmful to Stock Markets, and positive for Safe-Havens, like Gold.
From the technical point of view, USVIX above 19.30 will hold its current uptrend. While price is Moving above Main EMA lines and RSI slowly increasing above 50-level, with the price in the chart that also generally increasing, technically we can wait for higher numbers.
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