Safe-haven ETFs tracking volatility-index futures and Treasury bonds were this week’s best performers. Investors appeared to be taking a defensive posture and hedging as the U.S. fiscal cliff year-end deadline rapidly approaches.

Stocks were volatile heading into the weekend amid reports the House of Representatives will hold a session Sunday night as Congress and the Obama administration scramble to reach a compromise on the fiscal cliff.

This week’s top-performing ETFs were volatility-linked products such as iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX), VelocityShares VIX Short-Term ETN (NYSEArca: VIIX), VelocityShares Daily 2x VIX Short-Term ETN (NYSEArca: TVIX), ProShares Ultra VIX Short-Term Futures (NYSEArca: UVXY) and ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY). The leveraged versions were on track for weekly gains of more than 10%. [Volatility ETF Trading Volume Explodes as VIX Cracks 20]

“The markets are willing to turn on a dime, on whatever the news, whether it’s positive or negative,” Greg Peterson, director of investment research at Ballentine Partners, told Bloomberg News. “What the markets fear most is that we’re in this paralysis where the government is unable to govern, communicate and compromise.”

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