Cross-Asset Volatilities Normalize As Geopolitical Risk Premia Dissipates

Implied volatilities fell across major asset classes as the US-Iran peace agreement solidified and the Strait of Hormuz reopened, reducing geopolitical risk premia. Oil prices dropped to a 3-month low, though they remained about 20% above prior levels. The move is broadly supportive for risk assets and signals a sharp easing in market stress.

Analysis

Implied volatilities fell across major asset classes as the US-Iran peace agreement solidified and the Strait of Hormuz reopened, reducing geopolitical risk premia. Oil prices dropped to a 3-month low, though they remained about 20% above prior levels. The move is broadly supportive for risk assets and signals a sharp easing in market stress.