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Investors are increasingly hedging against market risks, as rising tail risk indexes and VIX skew reflect caution over tariffs, Fed policy, and global conflicts despite U.S. stocks hitting record highs.
But several barometers gauging uptake for protection against extreme market swings - such as the Nations TailDex Index and Cboe Skew- are picking up. While the rise in these indexes does not necessarily mean investors expect catastrophic events, they suggest elevated caution in the face of several weighty risks, including the potential of an inflationary snap-back to ructions in global trade next year.
One such risk came to the fore late on Monday, when Trump pledged big tariffs on Canada, Mexico and China - detailing how he will implement campaign promises that could trigger trade wars.
Though U.S. stocks largely shrugged off the comments, Trump’s broadside evoked flashbacks to the trade-fueled market swings that took place during his first term, bolstering the case for portfolio hedging.
Amy Wu Silverman, RBC Capital Markets head of derivatives strategy, said investors are guarding against so-called fat tail risks, options parlance for higher expected probabilities of extreme market moves.
"While investors broadly remain long equities, the tails are fatter," she said. "This is partly from a rise in geopolitical risk premium and certainly potential policy risk as Trump returns to the presidency and potentially enacts tariffs and other measures."
The Nations TailDex Index, an options-based index that measures the cost of hedging against an outsized move in the SPDR S&P 500 ETF Trust, has risen to 13.64, double its post-election low of 6.68. The index is higher now than it has been about 70% of the time over the past year.
Cboe Skew index, another index that indicates the market's perception of the likelihood of extreme price movements, on Monday closed at a two-month high of 167.28.VIX call options, which offer protection against a market sell-off, also shows some of this demand to protect against "tail risks." VIX three-month call skew - a barometer of the strength of demand for these contracts - is hovering near the highest level in over five years, according to an analysis by Susquehanna Financial Group.
At least 69 people have died and almost 150 injured following a powerful 6.9-magnitude earthquake off the coast of Cebu City in the central Visayas region of the Philippines, officials said, making it one of the country’s deadliest disasters this year.
A tsunami threat was issued in Chile after a magnitude 7.8 earthquake struck the Drake Passage on Friday. The epicenter was located 135 miles south of Puerto Williams on the north coast of Navarino Island.
The war in Ukraine has reached a strategic impasse, and it seems that the conflict will not be solved by military means. This creates a path toward one of two alternatives: either a “frozen” phase that can last indefinitely or a quest for a durable political regulation.
A shooting in Nice, southeastern France, left two people dead and five injured on Friday, authorities said.
Snapchat will start charging users who store more than 5GB of photos and videos in its Memories feature, prompting backlash from long-time users.
Türkiye has emerged as Europe’s largest steel producer and the world’s seventh largest in the first eight months of 2025, producing 36.9 million tonnes last year, according to sector officials.
Germany’s Adidas increased its full-year profit guidance, saying it managed to cushion some of the extra expenses resulting from higher U.S. tariffs.
Germany’s Adidas on Tuesday raised its full-year operating profit forecast, saying it had successfully offset part of the additional costs caused by higher U.S. tariffs.
New Zealand's annual inflation accelerated in the third quarter, reaching 3.0%, which aligns with analysts' expectations and is at the upper end of the central bank's target range, according to official data released on Monday.
On Sunday, the Netherlands' Economy Minister, Vincent Karremans, stated that he expects to meet with a Chinese government official in the coming days to discuss how to resolve the standoff over Nexperia NV, a computer chip maker whose issues are threatening global automotive supply chains.
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