Tech Fears Subside As Dovish Fed Expectations Return

2025-12-10 04:03:00 ET

By Mandy Xu

Cross-Asset Volatility : Implied volatilities fell across asset classes last week as expectations of Fed easing increased. The probability of a rate cut at this week’s FOMC meeting, as implied by the OIS market, has more than doubled from a low of ~40% two weeks ago to now 92+%, driving a rebound in risk asset prices and dampening volatility across asset classes. Equity volatility has fallen the most, with the VIX® index down 10 pts from its Nov high, now trading at just 15.4% (29th percentile low over the past year). FX and rates volatility screen even cheaper – both approaching 1-year lows – on the back of renewed dovish Fed expectations. Even crypto, which has borne the brunt of the recent sell-off, stabilized last week, though implied volatility levels remain elevated. MBTX 1M implied volatility gained by 0.5 vol pt to 47.2% (60th percentile high). Hedging demand remains elevated, with bitcoin skew still trading near 1-year highs (92nd percentile high over the past year)....

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