The VIX is near the one-year low flagged by Cboe even though the 10-year Treasury yield has reached its highest level since mid-2007. Cboe data show investors moving out of hedges and into upside call options, a pattern consistent with probability weighting and the availability heuristic, which help explain why one absorbed rate hike became a rule. Canadian inflation data on October 19 and the Bank of Canada decision on October 28 are the next tests.
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