The CBOE Short-Term Volatility Index (VXST) was down 38% last week as the stock market had the best week in almost two years. The five day drop from the previous Thursday to this past Thursday was a whopping 47%. I recently taught a class where a student commented that volatility does not seem to drop as quickly as it rises. This student had not heard of VXST.
The curve came in and returned to a somewhat normal shape after spending last weekend stuck in backwardation. I say somewhat because the current curve is in slight, but not very defined contango. A flat curve in the equity volatility space can often be a sign of uncertainty. Despite VXST quickly returning to the teens the nervousness has not completely been eliminated from the market.