Measures of volatility in stocks and currencies have tumbled this summer, with the Vix index slipping below 15, a level last seen before the US‑Iran war in February. Similar declines hit euro‑dollar volatility, pushing it to multiyear lows. The low cost of volatility signals investors see little chance of a flare‑up, even as oil prices surge toward $90 a barrel and bond yields edge close to their highest in years.

Institutional investors are selling volatility to profit from the rally. Palazzo Raphaël Thuin of Tikehau Capital notes that the Fed may raise rates only once or twice, while Matt Rowe of Man Group highlights central banks’ cautious stance on crude swings. Chris Turner of ING Groep says traders are learning to live with Gulf developments, expecting modest rate moves rather than a tightening cycle.

However, higher oil prices and rising bond yields remain key threats. April La Russe of Insight Investment warns of a powder keg if the conflict drags on, while Gerry Fowler of UBS points to low correlation between single stocks, which masks underlying volatility. Neil Birrell of Premier Miton stresses that single‑stock volatility is at extremes unseen before.

The mismatch between index and single‑stock swings could trigger a sharp market jolt if a crisis or a bad earnings report forces stocks to move together. Investors must watch how energy shocks and geopolitical risk interact with central‑bank policy.