Take a look at the current market situation in the USA, the outlook seems very promising: US stock prices continue to reach new highs, with the support of the optimistic sentiment in the global economy, csi enterprise bond index and csi commodity equity index also remain strong.

However, after in-depth research, traders have found that the USA market still exhibits volatility, which is almost a big issue across all asset classes.

In August and September, market turbulence intensified, prompting traders to take a large number of hedging measures to manage risks. This led to a sharp increase in hedging costs, almost in sync with the market volatility.

Currently, the options market reflects a strong demand for preventing a large-scale stock market crash, with the frequency of tail risk hedging strategies reaching rare levels seen in the past two years. The MOVE index tracking bond market volatility soared to its highest point since the beginning of the year, while a similar indicator measuring crude oil volatility also reached its highest level in two years.

Since August, the implied volatility of the iShares iBoxx USD Investment Grade Corporate Bond ETF has increased relative to actual price movements, indicating that traders are paying higher insurance premiums to guard against potential losses.

The market's concern is escalating over the upcoming USA election, the direction of the Federal Reserve's policies, and the recent market volatility.

While the market is currently calm, past shocks and uncertain future prospects seriously impact market sentiment.

Investors have a serious difference of opinion on the future economic outlook, with both bullish and skeptical sentiments coexisting. The S&P 500 index has risen for multiple weeks in a row, reaching a new high for the year, showing market optimism.

However, the market still vividly remembers the sharp declines in August and September, with the "fear index" VIX reading remaining high. The global cross-asset risk indicator of Bank of America has also reached the second-highest level this year, only surpassed by the market turbulence in early August.

"There is a higher possibility of extremely adverse events happening," said Amy Wu Silverman, the Capital Markets Derivatives Strategy Director at Royal Bank of Canada, "After the surge in VIX in August, the market has returned to normal and reached new highs. However, the potential 'concerns' still remain high."

Although the current market is calm, past shocks and the uncertain future outlook significantly impact market sentiment, compounded by Middle East conflicts, the U.S. presidential election, the shadow of the sharp declines in early August, this week's jobless claims data... the market's future remains extremely uncertain.

At the same time, there is a growing perception that the Federal Reserve led by Powell may not be willing to inject fresh vitality into the economy immediately. Data released on Thursday showed that consumer inflation exceeded expectations, and last week's U.S. employment report performed strongly, leading traders to retract bets on the size of rate cuts in 2024. Atlanta Fed President Raphael Bostic also stated that he is unwilling to cut rates again next month.

"There is an almost distrustful feeling in the market," said Peter Tchir, Head of Macro Strategy at Academy Securities:

"There are many concerns, yet the stock market is generally rising. We have already experienced several rapid declines."

"Despite some macro and micro risks, the market has been very strong," said Erika Maschmeyer, Portfolio Manager at Columbia Threadneedle Investments:

"As we approach the peak of the election and the next interest rate decision, we would not be surprised to see a pullback."

"Investors are extremely optimistic," said Michael O’Rourke, Chief Market Strategist at JonesTrading.

"Valuations are very high. Despite strong economic data, the Fed's aggressive easy-money stance has fueled investors' excessive confidence."