Japan Core Inflation Seen Rising in June, Strengthening BOJ Rate Hike Outlook 
Asian Stocks Slide as Nikkei Leads Losses on Tech Selloff and Rising U.S.-Iran Tensions 
Gold Price Holds Near Record High as Cooling U.S. Inflation Offsets Fed Caution 
Gold Prices Slip as Oil Rally Fuels Inflation Fears, Strengthens Dollar 
AI Chip Stocks Face Valuation Pressure as Investors Shift Toward Big Tech and Software 
Nikkei Plunges 5% as AI Stock Selloff Spreads Across Asia 
Brazil Weighs IP Curbs, Patent Suspensions After New U.S. Tariffs 
UBS Boosts China Tech Bets, Adds Kuaishou and Meituan to Focus List 
Asian Stocks Slide as Chip Selloff Deepens Ahead of TSMC Earnings 
IEA Warns China Rare Earth Export Curbs Could Threaten $6.5 Trillion in Global Production 
Dollar Slides as Softer US Inflation Dims Fed Rate Hike Expectations 
Oil Prices Rise as U.S. Strikes on Iran Raise Strait of Hormuz Supply Fears 
Brent Oil Jumps 16% for Best Week Since April as US-Iran Conflict Fuels Supply Fears 
Oil Prices Climb as Trump Escalates Iran Pressure, Strait of Hormuz Risks Grow 
US Stock Futures Fall as Netflix Outlook, Chip Selloff and Iran Tensions Weigh on Markets 
US Stock Futures Hold Steady as Soft Inflation Data Eases Fed Rate Hike Fears 
The CBOE Volatility Index (VIX) is showing signs of a possible rise in market volatility, according to the latest Sevens Report. After peaking significantly in August and subsequently falling to around 15, the VIX has started forming a series of higher lows. This pattern has not been seen since late 2021, a period that led to notable market instability. This was also further explained by CNBC in this in-depth analysis.
Unusual VIX Futures Structure Raises Concern
Sevens Research highlights the abnormal structure in VIX futures. The futures curve is currently in backwardation, where the October contract is trading at a premium to the November contract, as further explained by Reuters. This is uncommon, as typically, longer-duration futures trade at higher prices due to their greater associated risk. The inversion suggests that traders are preparing for a significant increase in market volatility before the October contract’s expiration in mid-October.
Indicators to Monitor for Market Movement
The Sevens Report advises investors to monitor three key developments: a rise in the VIX above the 24 level, which would indicate heightened volatility; normalization of the VIX futures curve, a potential positive signal for equities; or a growing premium between the October and November contracts. If the premium between the two contracts widens, it may indicate increasing risk of a market selloff that could send the S&P 500 back to its early September levels or potentially revisit early August lows.
Conclusion: Be Alert for Volatility Signs
The Sevens Report suggests keeping a close eye on these indicators over the next few weeks, as they may serve as early warning signs for market changes. With potential volatility on the horizon, investors should stay alert for potential shifts in market dynamics.
