Upside Chasing In Tech Stocks Surges To Covid Extremes

2026-05-12 02:00:00 ET

By Mandy Xu

Cross-Asset Volatility : Implied volatilities were mixed last week as risk assets continued to rally on better US economic data and hopes of US-Iran resolution. Oil, rates, FX, and credit volatilities all fell wk/wk led by oil volatility, with the OVX Index declining 3.3 vol pts to 72% - though oil still ranks as one of the richest cross-asset vols (see Exhibit 1). Inflation expectations fell on the back of lower oil prices, helping to drive both rates and credit volatilities lower. In contrast, both equity and gold implied volatilities gained modestly, with the VIX® Index rising 0.2 pt to 17.2% and GLD 1M implied volatility increasing 0.7 pt to 23.7%. The correlation (1M) between equities and gold has jumped sharply higher in recent weeks to a 1-year high of 83%, with gold trading more like a risk asset than a safe haven asset (see pg 3 for more on correlation). While the two assets have traded in tandem recently, their outlooks have diverged notably. While equity positioning has gotten more bullish, gold options positioning remains very cautious, with GLD 3M skew trading in the 87th percentile high (vs. SPX® 3M skew falling to near a 1-year low)....

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