3 days ago
Tariffs, turmoil, and the VIX: How April 2025 compares to past crises?
-- The surge in market volatility during April's tariff-driven panic may have felt extreme, but according to OptionMetrics, it pales in comparison to previous financial crises, at least by the numbers.
'The VIX exploded to a high of 60.13 on April 7th,' OptionMetrics analyst Brett Friedman wrote, 'a level not seen since the pandemic or the 2008 financial crisis.'
Yet when measured against past crises, the 2025 tariff panic proved less severe. The firm notes that the VIX peaked at 80.16 during the 2008 crisis and 82.69 during the 2020 pandemic.
What made April stand out was speed, according to OptionMetrics.
'It took only five days for the VIX to peak, and another 14 days to revert to the level from which it started,' Friedman noted. That rapid rise and fall may have amplified investor perceptions of severity.
Still, other volatility indicators are said to suggest a more muted event. The volatility risk premium was said to be below 2020. Similarly, VIX futures backwardation and implied correlation were less pronounced than in prior crises.
But while market volatility normalized quickly, underlying uncertainty has not.
'Since 1985, the EPU index is the highest it has ever been, and by a significant margin,' OptionMetrics found.
Using one measure based solely on news coverage, current levels even exceed those seen during World War II and the Great Depression, according to the firm.
'Although the VIX has returned to more 'normal' levels,' Friedman warned, 'this suggests that VIX spikes related to economic policy surprises and general uncertainty are still very possible.'
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