Implied Vol & HY Spread

Implied volatility continues to drop along with the recent string of record highs for US stocks. Credit risk, measured by the high yield spread (red line), closed at 3.22% yesterday, the lowest since 2018.

Although the S&P 500 has been reaching new highs while the NASDAQ-100 hovers just below its high, their respective measures of implied volatility have yet to reach the typical levels of the pre-COVID period. However, the volatilities are near long term averages.

The rebounding economy, vaccination efforts, COVID relief fiscal measures, and a seasonally strong period have contributed to record highs for equities and lows for yields. Is this all priced in already or does implied volatility suggest we have further to go for equities?