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Volatility spikes as markets fear geopolitical...

Yann Quelenn

Volatility spikes as markets fear geopolitical uncertainties. The summer is getting hot. Markets’ volatility has increased drastically amid tensions between the USA and North Korea. After hitting an all-time low last week, the VIX Index has surged towards levels unseen since last November. The risk-off move has pushed investors back towards gold and safe haven assets in general. In Mexico, the uncertainties regarding the Fed’s rate path has driven Mexican policymakers to hold rates. Indeed, despite strong US employment data for July, Fed members, James Bullard and Neel Kashkari, have declared that the US institution is not in a hurry to normalize the monetary policy. As a result Banxico is likely to lower rates before year-end to avoid a too strong appreciation of the peso.

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