Just like New York Federal Reserve President William Dudley, investors might be looking at the relationship between uncertainty and market volatility all wrong, one analyst says. The CBOE Volatility Index VIX, A reading below 20 is widely viewed as a signal of calm if not complacency. In the currency market, Barrow notes that one-year historical, or realized, volatility hit a postcrisis peak at just over Barrow notes that periods of uncertainty ahead of a key event can result in a pickup in implied volatility, which is what the VIX measures.

Economist Chris Dillow, in his column in the U. Dillow took exception to the idea that low volatility suggests investors are complacent. Instead, low volatility reflects a high level of disagreement between market participants, he said.

In other words, there is a healthy mix of bears and bulls.

Meanwhile, investors have plenty to wrestle with in coming weeks and months. The Federal Reserve seems to have well telegraphed an expected rate rise later this month, but the outlook for U.

Then there are elections in the Netherlands and, crucially, France that could see anti-euro parties gain power. William Watts is MarketWatch's deputy markets editor, based in New York. Follow him regulated forex traders Twitter wlwatts. By using this site you agree to the Terms of ServicePrivacy Policyand Cookie Policy.

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Why is market volatility so low when uncertainty is so high? - MarketWatch

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Why is market volatility so low when uncertainty is so high? By William Watts Deputy markets editor. This story was originally published March 6.

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