Elevated oil prices, a flare-up in inflation, and war in the Middle East ought to be a nasty combination for stocks. But Wall Street's go-to fear gauge suggests investors are still feeling Zen.

The Cboe Volatility Index, or VIX, was sitting at just over 15 early Thursday, implying traders expect daily swings of less than 1% for the S&P 500. Readings of below 20 tends to signal relatively low volatility.

That doesn't make sense. Soaring bond yields have put the market in panic mode lately, with the 10-year Treasury hitting its highest level since the start of President Donald Trump's second term in office.

So the VIX should be flashing red-but it isn't.

Part of the disconnect is down to the surge in popularity of exchange-traded funds that sell options. These keep a lid on the VIX, which measures uncertainty by tracking S&P 500 call and put contracts.

The fear index's subdued level may also reflect a sense of complacency after large-cap companies posted another batch of strong quarterly earnings, in part thanks to the boom in artificial-intelligence demand.

The risk is that the focus could soon shift from corporate reporting to the economy. There's a slew of data due out over the next two weeks, including Friday's nonfarm payrolls report and a Sept. 11 inflation print.

The numbers will help decide the Federal Reserve's next move-and if the central bank does hike later this month, bond yields will likely extend their run higher.

That's a worrying prospect for the market-but perhaps the sort of jolt needed to get Wall Street's favorite fear gauge working properly again.