Tech Fears Subside As Dovish Fed Expectations Return
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Cboe Global Markets568 FollowersFollow5ShareSavePlay(7min)CommentsSummaryTech fears have subsided on the back of increasing expectations of a Fed rate cut (now ~92% implied probability vs. 40% two weeks ago), with the QQQ-SPX 1M implied volatility spread narrowing from a 1-year high of 8% to now just 4.1% (27th percentile low over the past year).This can also be seen in the performance of the Cboe® Magnificent 10 Index which tracks 10 of the largest Tech/AI companies (Mag-7 plus AVGO, PLTR, and AMD) relative to the broader market.Cboe is launching cash-settled options and futures on MGTN Index starting today, giving investors a more precise and efficient way to express tactical views on the AI/Tech theme. Dilok Klaisataporn/iStock via Getty Images By Mandy Xu Cross-Asset Volatility: Implied volatilities fell across asset classes last week as expectations of Fed easing increased. The probability of a rate cut at this week’s FOMC meeting, as implied by the OIS market, hasThis article was written byCboe Global Markets568 FollowersFollowCboe Global Markets (CBOE), a leading provider of market infrastructure and tradable products, delivers cutting-edge trading, clearing and investment solutions to market participants around the world. The company is committed to operating a trusted, inclusive global marketplace, providing leading products, technology and data solutions that enable participants to define a sustainable financial future. Cboe provides trading solutions and products in multiple asset classes, including equities, derivatives and FX, across North America, Europe and Asia Pacific.Quick InsightsHow have dovish Fed expectations impacted cross-asset volatility?Dovish Fed expectations drove implied volatilities lower across equities, rates, and FX, with VIX and other measures nearing 1-year lows and risk assets rebounding.What is the significance of Cboe's new MGTN options and futures launch?Cboe's MGTN options and futures provide targeted exposure to AI/Tech volatility, which has realized vol spreads of +4% to +29% over SPX in the past year.Where is SPX skew steepest, and what does this indicate for hedging?SPX skew is steepest in the front month, indicating concentrated hedging demand into year-end, while 6M skew has dropped to the 8th percentile low.Recommended For You