Risk appetite drops
SHORT-TERM TREND
It was a typical risk-off month in May
Risk
- Equities and the most risk-sensitive fixed-income assets posted negative returns.
- U.S. Treasuries led the global rates rally.
- Precious metals gained, buoyed by the weakness in global stocks and other assets.
- Oil prices declined.
LONG-TERM CYCLE
This 10-year illustration captures the cyclicality of investors’ appetite for risk.
Sept–Nov '11
Eruption and subsequent clearing of concerns over EU sovereign debt crisis, U.S. debt ceiling, and fear of China hard landing drive major risk selloff and rally.
March '16–Jan '18
Risk assets rally amid improving commodity prices, perceived stability in China's macro data, and expectations for gradualist Fed policy.
Source: Data as of May 31, 2019. To create the Global Risk Appetite Index, we weigh the monthly excess returns of 30 different asset classes over 3-month T-bills relative to the trailing 2-year volatility of each asset class. The higher the excess return and the lower the volatility, the greater the risk appetite; conversely, the lower the excess return and the higher the volatility, the stronger the risk aversion.