This blog has made note multiple time that the bond market has started to move. What is important to understand is that unlike markets like gold, or even currency. If the bond market moves out of its range so will the stock market. However, there is a more important point to made with bonds right now: its too cheap to own gamma. Take a look at 10 and 20 day realized volatility relative to implied.
The answer is at least two days. Yesterday and today.
Today retraced most of the goldilocks rally in stocks on Friday. 2 days pass and without any real good news (TPP failed in the Senate) stocks had a hard time mustering anything. Early morning bond selling started things off on the wrong foot too. The reality is the fear is just not there as the big elephant is rates and the ECB is content to plod along with bond buying until the Greece issue passes. We only catches glimpse of what will happen when rates start to reset. For now that is just not happening.
Yes, today there was a huge trade in the VIX pit. It is only news because its a slow day. While that is a big trade it is no where near the biggest that pit has seen and would essentially be a light sneeze in SPX. To make matters more interesting, that is not the VIX index that is going to be leading. Many traders are noting that the SPX has been the tail to the bond market's dog. Well the VIX is likely to head the same way. We have seen increases in IV of FX and Oil affect the markets.
Mark was filled on his 66 call for 1.25
Mark made a great observation yesterday on bond IV being relatively low. Today we had the 2% move and he was right. VIX is sitting in an interesting place as we are seeing 1% intraday SPX moves right now on the recent volatility in European bonds. If today was last year, the VIX future would have closed even with the old VIX cash.