While the VIX is pretty cheap, it's bond equivalent MOVE is moving upwards. To break down the mechanic I calculate the VIX/MOVE ratio (see chart) which is trending down since September. What is behind the divergence? Bond yields can be deconstructed into three components: Expected inflation, the expected future path of real short-term interest rates, and a term premium (the "catchall" component). Bond market vol on the other hand side correlates with yields, so it is obvious that bond vol is trending upwards to price in a tightening Fed. Circling back to the original question: I have no idea why the VIX is cheap, but it is obvious why MOVE is getting expensive. Stocks are increasingly driven by an exuberant option market as Zerohedge pointed out recently and most retailers hold their options less than a week, so there is certainly a quite speculative dynamic in play. Be careful out there when you try to make a quick buck before the Powell steps on the brake. But well..maybe Brainard it is :)..