Back before the holidays, I highlighted what I thought was an unsustainable trend: low equity market volatility. Since then, U.S. equity market volatility has continued to decline. Last week, the VIX Index - a commonly used measure of equity volatility - dropped below 11, the lowest level since the summer of 2014, before the U.S. travel ban-related selloffs sent the index climbing earlier this week to near 13. Still, the VIX is very low by historical standards, and this is occurring against a backdrop of considerable political uncertainty. What is causing this and can it continue?
Equity investors are enjoying an unusually tranquil start to the year, particularly in contrast to last January. Benign credit markets and a more robust economy deserve much of the credit. As I've written about…