Canada Retaliatory Tariffs on U.S. Goods Take Effect 
German Inflation Accelerates to 2.9% in August 
ECB Rate Hike in Focus as Oil Tops $100 
Asian Stocks Mixed as Korean Chipmakers Rally 
Japan GDP Growth Beats Forecast, Boosting BOJ Rate Hike Bets 
China Buys 1 Million Tons of U.S. Soybeans Ahead of Xi Visit 
Asian Currencies Steady as Yen Holds Firm, Oil Tops $100 
Asian Stocks Mixed as AI Chip Rally Meets Oil Surge 
South Korea GDP Surges on Chip and AI Boom 
China Exports Surge 25% in August as Trade Surplus Hits $119 Billion 
UK Food Inflation Forecast to Hit 6.4% by Mid-2027 
Oil Prices Climb as Iran Threatens Gulf Energy Infrastructure 
Gold Prices Rise as Yen Rally Weakens Dollar 
Iraq Seeks 6 Million Bpd OPEC+ Oil Quota 
Gold Prices Rebound as Dollar Weakens, Fed Decision Looms 
US Stock Futures Mixed as Fed Rate Hike Bets Rise 
US Bans Canadian Alcohol, Motorcycles as Trade War Escalates 
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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.
