Investor uncertainty in the US - Data and Analysis (1990-2032)

Investor uncertainty is set to cool in 2026, with the VIX projected to fall -4.3% to reach an average index value of 18.2, following a 22.3% surge in 2025. Still elevated, volatility spiked after US and Israeli strikes on Iran in late February and Iran's subsequent blockade of the Strait of Hormuz, a critical chokepoint for global oil supply. Anxiety eased after a ceasefire reopened the strait in April, and strong earnings from AI-linked technology firms pushed the S&P 500 to record highs. The Supreme Court's February ruling striking down tariffs imposed under emergency powers also limited the type of sudden trade shocks that rattled markets in 2025. However, renewed hostilities in the Gulf have pushed oil prices back up and kept inflation well above target, prompting the Federal Reserve to raise rates in September for the first time since 2023. Surging long-term bond yields and sharp swings in AI stocks are expected to keep volatility from falling further by year-end.From 2021 to 2025, investor uncertainty exhibited significant volatility, n response to health crises, monetary policy shifts and geopolitical shocks. Volatility remained elevated in 2021 as new COVID-19 variants, lockdowns in China and supply chain disruptions clouded the recovery. However, ultra-low interest rates and government stimulus supported a strong equity rally that kept fear in check.Uncertainty surged in 2022. The Federal Reserve hiked interest rates aggressively to combat soaring inflation, triggering a broad-based stock selloff. Russia's invasion of Ukraine amplified geopolitical risk and sent energy prices soaring, accelerating demand for safe-haven assets. Uncertainty fell sharply in 2023 as inflation cooled and investors anticipated an end to rate hikes, with regional bank failures early in the year causing only a brief spike. Calm deepened in 2024 as the Fed began cutting rates and enthusiasm over AI drove strong gains in technology stocks, although the unwinding of the yen carry trade caused a short-lived jolt in August.Investor uncertainty rebounded in 2025. Sweeping tariffs announced in April triggered one of the sharpest volatility spikes since the pandemic, as investors priced in the risk of a global trade war and a US recession. Volatility eased in the second half of the year as the administration paused or scaled back many tariffs and negotiated trade deals with key partners. The passage of the One Big Beautiful Bill Act in July extended individual tax cuts and expanded business tax breaks, while the Fed cut its policy rate three times late in the year. These developments lifted sentiment but did not fully offset concerns over trade policy and stretched equity valuations.