Within the last week, we’ve read about threats of another war in the Middle East, collapsing currencies across emerging markets, imminent rumblings of yet another Greek bailout.

Investors are looking to the Fed’s much anticipated pronouncement on the “end” of QE.  Talk abounds of September being the worst month for stocks; October’s record is blackened with crashes.

And yet: yesterdays’ close of 14.16 for the most widely followed barometer of fear, the CBOE Volatility Index (VIX), is close to a third below its 10-year average.

Has the VIX, the vaunted “fear gauge,” ceased to reflect true market anxiety?

It’s worth pointing out that  VIX markets are not predicting an easy ride forever.  The VIX index represents a blended expectation of S&P 500 Index volatility for the next 30 days; futures on the VIX Index extend the forecast to supply longer-term volatility expectations.  As shown above, these futures prices increase steeply to a level in line with VIX’s 10-year average.  Given that this 10 year interval includes both the “great moderation” of 2003-2008 as well as the subsequent five years since the bankruptcy of Lehman Brothers, the bigger picture for volatility seem neither particularly bullish or bearish.