"Three forces are pinning implied volatility to the floor. Geopolitical risk that drove the March spike, including the war in Iran and Strait of Hormuz disruptions, has been partially priced in as oil prices fell back below $100. Rates are the second anchor: the 10-year Treasury yield sits at 4.4%, in the 88th percentile of the past year, with traders watching whether the long bond mounts a sustained push above 5%. The third is earnings season delivering enough beats to keep dip-buyers engaged."
"McDonald's topped estimates with EPS of $2.83 on revenue of $6.52 billion and U.S. comparable sales of 4%. CEO Chris Kempczinski warned the consumer backdrop "is certainly not improving, and it may be getting a little bit worse." Shares were modestly higher after fading early premarket gains."
"Whirlpool shed 13% after slashing full-year ongoing EPS guidance to $3.00 to $3.50, suspending the dividend, and citing a "recession-level industry decline"."
The VIX dropped 1.2% to hover above 17, extending its decline from a March 27 peak of 31.05 and entering the normal 15-20 band. Three factors anchor implied volatility: geopolitical risks from Iran and the Strait of Hormuz have been partially priced in as oil fell below $100; Treasury yields remain elevated with the 10-year at 4.4% and 2-year at 3.849%; and earnings season delivers enough beats to maintain investor engagement. However, the earnings picture reveals complications: McDonald's warned the consumer backdrop is not improving and may worsen, Whirlpool slashed guidance citing recession-level decline, and Shake Shack missed revenue expectations significantly.
#vix-and-market-volatility #earnings-season #treasury-yields #consumer-sentiment #economic-indicators
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