It is amazing what a new year and abundant investor liquidity can do. Despite the tax increase that really does nothing material to balance the budget, the markets have sighed a major relief rally early in 2013. One of the most striking results has been a significant decline in the VIX:
On Friday, the VIX hit an intra-day low of 13.64 which is a hair away from the multi-year low of 13.39. This occured despite historic realized 10 day volatility of about 19%, 20 day volatility of 15.4% and 50 day volatility of about 14%.
With the debt ceiling debate coming to the forefront, I would imagine that a decline in the VIX from here is exceedingly unrealistic.