Dow Jones, Volatility, Treasury ETF Fund Flows Post-FOMC

After breaking above the pre-pandemic highs in November and climbing above the 30,000 level for the first time, the Dow Jones continued its upward journey in 2021. Volatility-related hiccups in late January and early March were quickly brushed to the side as the Dow climbed higher, hitting the 34,000 level for the first time in mid-April. Since then, the Dow has traded mostly sideways, remaining between 33,700 and 34,200.

DOW JONES INDEX – 45 MINUTE TIME FRAME (JANUARY – APRIL 2021)

DOW, Dow Jones, DJIA

Chart created by Izaac Brook: Source: TradingView

The lack of further upside in the Dow has translated to quiet on the ETF flows side. DIA, the leading ETF for the Dow Jones Index, saw its largest inflow since January in mid-April alongside the fresh all-time highs. Since then, moves in the ETF have consistently been inflows. However, the size of these inflows are miniscule compared to those seen earlier in the year. The Dow may need a further catalyst such as progress on an infrastructure bill or notable positive developments on the economic reopening front to drive another round of ETF buying.

DIA, DIA ETF, DIA ETF Fund Flows

Since hitting its highest level since the financial crisis in March of 2020, the Volatility Index (VIX) has worked its way back downwards, with a number of spikes during various episodes of market concern such as the election and the GME short-squeeze. The VIX dropped below the 20.00 level in mid-March for the first time since February 2020 and has mostly remained there since.

VXX, Vix, VXX ETF, Vix ETF, Vix ETF Fund Flows

Despite the continued decline in the VIX and a lack of recent volatility in financial markets, the VIX ETF VXX saw its largest one-day inflow since the summer of 2020 ahead of the FOMC meeting. With the VIX so low yet considerable economic uncertainty remaining, it may not be so surprising that investors are looking to bet on heightened volatility in the future. However, if traders were expecting the FOMC to unleash a bout of market volatility, they were certainly disappointed.

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