Long- and short-term volatility are converging as the markets continue to grind sideways. The most notable movement this week is the sharp reversal in agriculture commodities from the drought. Agriculture commodities are some of the few assets seeing short-term volatility surpass long-term volatility.
Market volatility is an indicator of financial stress. Low or declining volatility environments may indicate favorable periods for equity investments, whereas rising volatility periods may favor sovereign debt and developed market currency exposure.