While equities hitting new 52-week highs has been a pain trade for many investors, let’s not forget the role that lower volatility has played in adding to the discomfort. The fact remains that it is difficult (if not impossible) to envisage an impending recession with VIX below 14.

Our long-term fundamental volatility models highlight the risk of equity volatility dropping further from here and entering a multi-month period of low volatility.