Tuesday’s sell-off has brought another spurt of volatility back to Wall Street.

The Cboe’s Vix index, popularly referred to as Wall Street’s “fear gauge”, is up 13 per cent to 17.86 at lunch time in New York.

That is its highest level since Friday, and its biggest one-day jump since February 8. The index had been as high as 18.34 this morning, a jump of 16.1 per cent.

Volatility has, in general, been on the slide since early February when the number of exchange-traded products allowing investors to bet on the Vix went into spasm and saw the gauge more than double in a single session.

That was the Vix’s biggest one-day jump on record, taking it to 37.72. While that level was not quite as eye-watering as those seen during the financial crisis, it was a long way from the tranquility that saw the index hit a record low in the single digits last year.

The shake-up in markets this month prompted many analysts and commentators to proclaim that “volatility is back”, and has stirred debate about what level the index will revert to. Readings in the high teens have traditionally been seen as the long-term average.

“Risk appetite looks more buoyant, and Vix has fallen below 20 once again,” Daniel Been and Giulia Specchia at ANZ Banking Group noted last week. “We do not think that this is a sustainable state of affairs. Economic volatility and market correlations are rising and funding markets are widening — all these things point to a higher volatility regime being in place.”

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