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Bailey McCann, Opalesque New York: Risk was down substantially in Q3 for all regions according to new data released today by US-based risk monitoring firm Axioma. The decline tracks with the biggest drop in the VIX since 2007. Axioma’s short-horizon risk forecast for the FTSE Developed Index was roughly half its level of a year ago and down 25% percent from the end of the second quarter. Declines in overall market volume suggest that investors may have stayed on the sidelines fearing less than optimal corporate earnings and global macroeconomic tumult - fears that were largely justified.

For the second consecutive quarter, statistical risk factors did not seem to pick up anything that was not reflected in the fundamental models, suggesting once again an absence of lurking risk and, hence, the reduced likelihood of a "surprise" in the coming months. The possibility of a market correction was also reflected in data from Bank of America Merrill Lynch reported on by Opalesque earlier today.

"The macro issues we are seeing in the headlines could already be baked into stock prices, and for that reason volatility has remained subdued. Or, the extreme uncertainty in current markets may have simply paralyzed investors, which would also have had a dampening effe......................

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