Bank of America: The Hunt for Yield May Be Reaching an Inflection Point
Volatility could be set to make a major comeback.
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No trade is safe from the great search for yield, not even volatility.
Research by Bank of America Merrill Lynch shows there's been a steep drop-off in exposure to securities that gauge expectations of volatility, as investors sell a VIX index that's already at depressed levels to enhance yield. The market is at its lowest VIX exposure as far back as their data goes, they say, meaning there's a brewing risk of a sharp correction.