Stocks were getting clobbered on Wednesday in afternoon trading, but some other big moves are equally alarming.
The Canadian dollar, which tends to move with commodity prices and investor risk appetite, was getting slaughtered. It was recently down 1.5 cents (U.S.) against the U.S. dollar, falling to a mid-March low. That marks the biggest one-day decline in nearly eight months.
The loonie has now fallen a total of 3.7 per cent from its recent high at the end of April, a decline that has coincided with a 7 per cent downturn for the S&P/TSX composite index.
With the loonie down, the U.S. dollar is up, as investors continue to see the greenback as a haven during tumultuous times. The U.S. dollar index, which compares the dollar against a basket of currencies, was recently up 1.6 per cent to 75.54 - its highest level since the end of May.
At the same time, U.S. government bonds are proving to be popular bomb shelter. The yield on the 10-year U.S. Treasury bond dipped below 3 per cent again, to 2.98 per cent. Yields fall as bond prices rise. As for gold, it merely held its own: It rose all of 83 cents, to $1,524.60 an ounce.
And finally, behold the VIX, or CBOE Volatility Index, which is widely considered a fear gauge. Though the index had been shrugging off recent stock market volatility, it now appears to be reflecting some investor anxiety. It surged 13.5 per cent on Wednesday, to 20.7, and hitting its highest level since mid-March, when Japan was hit by a devastating earthquake and tsunami.
David Berman