The VIX ended the day down nearly 9% just below 23.  Though this is still higher than its close on either last Monday or Thursday, it at least contradicts the new high made in hectic morning trading.

    Short-term treasuries continues to strengthen against precious metals, with differential relative strengths breaking under par as of early July.  Likewise the S&P continues to strengthen against treasuries, although the Russell remains much weaker than the S&P.  This was quite apparent today, as the S&P tracker SPY nearly doubled the Russell tracker IWM's return.

    I would put little faith in the pre-market futures tomorrow until at least 8:30's productivity report, and the market should obviously remain primarily focused on the FOMC statement, but I will continue to watch the VIX and these relative strength measures as an indication of how much damage a bearish policy statement could cause.

    The trend this week is clear - investors fear that credit risks will spread through the corporate world, either directly or via lending crunch, but still believe that the market can regulate the issue and that fixed-income assets are safe enough.  I come to that last conclusion by seeing treasuries continue to strengthen against the S&P as well as gold and silver.  Worst hit by credit fears, as could be predicted, are small caps, who are obviously most likely to be hit by more stringent credit standards.