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By James MackintoshUpdated Aug. 23, 2016 4:36 a.m. ET33 COMMENTSCalm has descended on the U.S. stock market.The past 30 days have been the least volatile of any 30-day period in more than two decades. Only five days during the most recent stretch saw the S&P 500 move by more than 0.5% in either direction, the lowest since the fall of 1995.Back then, the Federal Reserve was paused between rate cuts. This time around, a combination of the summer lull in trading and super-easy global monetary policy has helped drive volatility to levels seen only a dozen times in the past half-century.“Last week and the week before, you had to make sure your machine was actually on because it was flashing so infrequently,” said Jared Woodard, a strategist at Bank of America Merrill Lynch, referring to the changes in stock prices on computer terminals.The quiet market, measured by the realized volatility—a measure of how much share prices move around—of the S&P 500, has led some to worry that a market storm may be brewing, as peaceful periods in the past have frequently ended in sharp corrections.Implied volatility, a measure of stocks’ expected future volatility and of the cost of options, has collapsed alongside realized volatility. The CBOE VIX index on Friday dropped to levels last seen in the summer of 2014—a period of calm that ended decisively with panic buying of bonds that October. The VIX, seen as Wall Street’s fear gauge, rose slightly on Monday, as the S&P fell fractionally to 2182.64.Previous periods of very low volatility were in early 2011, before the U.S.’s near-default and loss of triple-A status, and January 2007, a few months before the collapse of two Bear Stearns Cos. hedge funds marked the beginning of the credit crunch.There is more going on now than just the summer holidays. The markets are very rarely this serene, with S&P 500 realized volatility lower only a dozen times in the past half-century. In data back to 1928, this level of volatility appeared frequently only during the period from the 1951 removal of the Federal Reserve’s cap on bond yields to President Richard Nixon’s 1971 scrapping of the dollar’s link to gold.Mr. Woodard said Britain’s vote in June to leave the European Union had shocked investors, many of whom then closed their big market positions. Without many aggressive bets, there has been less need to trade on the news—and there hasn’t been much news, anyway.* * *
