Volatility subsides as event risks fade
‘Tis the calm before year-end, when all through the street,Not a currency is stirring—even the yen is tucked in its seat.Dollar short positions are hung by low vols with care,In hopes that Fed easing soon will be there.Traders are nestled all snug in their carry-trade beds,While dreams of smooth returns dance in their heads.And CFOs in their spreadsheets, and dealers in our caps,Have settled our brains for a long euro nap.With central banks humming “data-dependence,”And markets downplaying threats to their independence,We’ve priced every possible outcome as tidy and small—No tail risk at all. No tail risk at all.But what if,...