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A shortened holiday week delivered a sharp VIX decline and a broad equity recovery, with Rivativ model portfolios' simulated returns ahead of the index.
Week 27 (29 June – 3 July) was a four-day trading week ahead of the US Independence Day holiday, but markets packed plenty of action into it. After the S&P 500 shed roughly 2% in the prior week, US equities staged a meaningful recovery, supported by broad-based strength in large-cap technology and an easing of geopolitical tension following news of a temporary ceasefire between the US and Iran. The S&P 500 gained approximately 2% on the week and closed Q2 with a remarkable +14.9% quarterly return — its strongest quarter since 2020. The Nasdaq Composite did even better, posting a quarterly gain of around +21.4%.
For options traders, the week's defining storyline was the sharp compression in implied volatility. The VIX fell from 18.41 at the prior week's close to 15.81 by Thursday's close — a decline of roughly 14% over four sessions. This was a significant vol regime shift: we moved from Zone 2 (mildly elevated) back toward Zone 1 territory, with direct consequences for both premium sellers and vol hedgers.
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Treasuries hit 19-year highs as October rate hike odds climbed toward 70%, yet equities powered through the pressure, led by Meta's AI showcase and a broad technology rally. →
