Bracing for La Niña and perception of risk dissipates in equities

By Blu Putnam, Chief Economist & Erik Norland, Senior Economist, CME Group

Bracing for the Onset of La Niña

• La Niña could impact crop weather in US, Brazil, and Canada.
• Greater risk of flooding in Australia, likely more typhoons in China.
• La Niña tends to elevate volatility in agricultural futures markets.
• Options markets show investors are taking La Niña in stride so far.

Options: More Caution in Nasdaq Than Other Markets

• Implied volatility in Nasdaq-100 and S&P 500® plunged post-election.
• Despite decline, risks considered higher in Nasdaq-100 than S&P 500.
• Caution in tech-heavy Nasdaq-100 based on sharp gains in the summer.
• Will risk in equities escalate in 2021 amid lackluster global growth?