Investors are the least fearful they've been since COVID hit

The market's "fear gauge" is at lows not seen since the start of the pandemic.

Why it matters: It's another indication of the optimistic psychology that seems to have the upper hand in markets at the moment.

• It suggests the current rally may well prove to be a new bull market.

Driving the news: The fear gauge in question is the Chicago Board Options Exchange's Volatility Index — sometimes known as the VIX. In recent days it's fallen below 14, territory last seen in February 2020, just before the COVID pandemic exploded in the U.S.

Catch up fast: The S&P 500 has gained more than 27% off the low it hit on Oct. 12.

• The benchmark index is just 5% from a new record high, the confirmation market mavens look for before christening a new bull market.

The bottom line: As we've argued before, this rally doesn't say much about the prospects for corporate profits over the next year. Rather, it's a collective sigh of relief from the financial sector, which now believes the post-pandemic inflation — and the Fed's rate hikes — are conclusively behind us.