CHART OF THE DAY: FOMC Volatility Spike

Volatility has been a key theme in financial markets in recent months, and the latest FOMC meeting was no exception.

The FOMC raised interest rates by 50 basis points, as expected, but the market reaction was anything but tame.

The CBOE Volatility Index (VIX), a measure of expected volatility in the S&P 500, spiked to its highest level since March 2020, and the S&P 500 itself fell by more than 3% in the immediate aftermath of the announcement.

This volatility is likely to continue in the coming months. The FOMC has signaled that it will continue to raise interest rates aggressively, and the war in Ukraine and the ongoing COVID-19 pandemic are continuing to create uncertainty in the global economy.

Investors should be prepared for a bumpy ride in the months ahead. Volatility is likely to remain elevated, and the potential for further market sell-offs is real.

What is the FOMC?

The Federal Open Market Committee (FOMC) is a committee within the Federal Reserve System that is responsible for setting interest rates.

The FOMC meets eight times a year to discuss the economic outlook and to set interest rates.

The FOMC's decisions have a significant impact on the financial markets and the economy as a whole.

What is the VIX?

The CBOE Volatility Index (VIX) is a measure of expected volatility in the S&P 500.

The VIX is calculated based on the prices of S&P 500 index options.

A higher VIX indicates that investors are expecting more volatility in the S&P 500 in the near future.

Why did the VIX spike after the FOMC meeting?

The VIX spiked after the FOMC meeting because investors were surprised by the hawkish tone of the FOMC's statement.

The FOMC signaled that it will continue to raise interest rates aggressively, and this has raised concerns about the potential for a recession.

The war in Ukraine and the ongoing COVID-19 pandemic are also contributing to uncertainty in the global economy, and this is making investors more nervous about the future.

What does the spike in the VIX mean for investors?

The spike in the VIX is a sign that investors are expecting more volatility in the S&P 500 in the near future.

Investors should be prepared for a bumpy ride in the months ahead.

Volatility is likely to remain elevated, and the potential for further market sell-offs is real.

What should investors do?

Investors should consider taking the following steps to prepare for increased volatility:

• Diversify their portfolios.
• Reduce their exposure to risk.
• Be prepared for the potential for further market sell-offs.