As we roll into the final week of summer, I can’t help but notice how calm markets are. Despite having a new Chairman at the Federal Reserve, despite approaching the U.S. midterm elections, and despite entering the historically weakest month of the year for the S&P 500, markets remain remarkably docile.
The question is: is that a good thing?
S&P 500 and NASDAQ 100
Both major indices managed small gains last week while doing nothing to alter the larger trends currently in place. For now, the easy one-liner is that both are consolidating near record highs within long-term uptrends, above rising 60-week moving averages.
Source: Optuma
Warning: The next four charts are somewhat redundant, but that's the point.
S&P 500 Volatility
The S&P 500 Volatility Index (VIX) is pressing against its lowest levels of the year. The one-year stochastic confirms this, ending August below 5.
Recall that the stochastic tells us where an asset sits within its lookback range, one year in our case. Readings near 100 indicate the top of the range. Readings near zero indicate the bottom.
Source: Optuma
NASDAQ 100 Volatility
The NASDAQ 100 Volatility Index has established a local low and is moving back toward the lows recorded earlier in 2026. The one-year stochastic is closer to the middle of its range, but it has made considerable progress toward lower levels.
Source: Optuma
Treasury Volatility
The MOVE Index is essentially the VIX for Treasuries. Just as we have seen in equities, Treasury volatility has been moving lower since March. The one-year stochastic sits near 25, indicating the index is in the lower quarter of its one-year range.
Source: Optuma
Gold Volatility
For those who didn't know, there is even a volatility index for gold. After two significant spikes earlier this year, gold volatility has settled down as well. The one-year stochastic currently sits near 27.
Source: Optuma
So the last four charts tell the same story. Major risk assets are calm, and two key diversifiers to risk assets are calm as well.
Maybe it's simply the summer doldrums. I don't really buy that argument anymore. People can work from the beach, Europe, or wherever they happen to be spending the week before Labor Day.
Truthfully, I'm not going to guess why markets are so calm. The "why" doesn't get you paid.
Seasonality
I will note, however, that all of this calm is taking place as we are about to enter the historically weakest month of the year for the S&P 500.
Source: Optuma
Final Thoughts
The calm in the market, by itself, is not a signal to do anything. We have all been conditioned to believe volatility is mean-reverting, but that tendency is most powerful after volatility spikes higher. Low volatility, on its own, is not typically a warning that high volatility is imminent.
What makes the current environment noteworthy is how widespread the calm has become. Equity volatility is low. Treasury volatility is low. Gold volatility is low. Markets across asset classes are sending the same message.
That does not mean volatility can't return. It can, and eventually it will. But right now, the weight of the evidence suggests stability, not stress. Will September seasonals change that?
