Volatility Falls On Ceasefire Hopes, Yet Caution Remains

2026-04-06 23:45:00 ET

By Mandy Xu

Cross-Asset Volatility : Implied volatilities fell across asset classes last week on optimism over an Iran ceasefire. Interest rate volatility declined the most, with the VIXTLT Index falling over 31 pts wk/wk to 85 bps vol as Powell signaled the Fed will take a “wait and see” approach to any energy-driven inflation increase. Both equity and credit volatilities came in significantly as US economic data surprised to the upside, with the VIX® Index down over 7 pts and the VIXIG Index down over 18 pts though both still remain elevated in the ~88th percentile high over the past year. Gold volatility fell 7 pts as prices rebounded – notably, however, investors used the rally to reset hedges. GLD 1M skew (25-delta ratio) jumped back to a 1-year high on the back of stronger put demand. Despite the risk-on tone in the market last week, oil prices continued their upward climb, with WTI crude ending the week over $111/bbl (+12% wk/wk) while oil 1M implied volatility held steady at 81%. There’s been very little change in positioning in the oil options market despite talks of a ceasefire, with demand for calls still outpacing puts and oil skew remaining at extremely inverted levels across the front 6-month tenors....

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