A measure of Wall Street volatility on Friday rose sharply, putting it on track for its largest weekly gain in more than 5 months as U.S. equity benchmarks tumbled and as the 10-year Treasury notes extended its 5-day climb above 2.8%–its highest level in more than four years. The CBOE Volatility Index was up at 15.22, up 12%, on track for a weekly rise of about 37%, which would represent its sharpest climb since Aug. 11, 2017, according to FactSet data. The VIX uses bullish and bearish option bets on the S&P 500 index to reflect expected volatility over the coming 30 days, and it typically rises as stocks fall. However, the gauge, sometimes referred to as the fear index, has been abnormally low, trading below its historical average at around 20. A weeklong rise in 10-year Treasury note yield above 2.84% on Friday after an upbeat jobs report stoked fears of rate hikes and rising inflation, helped propel yields higher. Rising rates can undercut appetite for stocks if government paper offer richer yields than risk assets like stocks. The Dow Jones Industrial Average was down 334 points, or 1.3%, eyeing its worst weekly decline in two years, the S&P 500 index slumped 0.9% at 2,796, while the Nasdaq Composite Index are off 0.8% at 7,329. The rise in the VIX implies that volatility in otherwise subdued markets its beginning to make a comeback.
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