Tuesday, 15 October 2013

Should you be worried about Oct 17 - US debt ceiling ?

Thanks to the media and internet, by now most of us know that US will run out of money this week if the Republicans and Democrats cannot reach an agreement to raise the borrowing limit coming 17 Oct. And if this happens or is going to happen, shouldnt there be a lot of fear in the market.

One of the indicator known as the 'fear' indicator, VIX(^VIX) is commonly used as a guide to determine the sentiment of the investors or the volatility of the market. Looking at the chart below, the indicator is below 20 now, meaning that there is not much of fear now, business as usual. The last time that it hits 40 was in Aug 2011 period where there were lots of news about US and Europe being in a prolong recession and also at the same time, Standard and Poor's downgraded the US credit rating.

In that case, we still have a long way to go from the current 16 to 40.

Source: Yahoo Finance


Money Honey said...

One needs a good night sleep without having to worry of 17 Oct so he / she will act accordingly using past trading and investing strategies which have been successful.

Oldman said...

Yes that's right. Agree,