Risk appetite retreats
Coronavirus fears weigh on global stocks and oil.
- Most equity indices fell, with technology and internet-related indices faring better.
- U.S. Treasuries led the rally among bonds.
- Rate and inflation-sensitive bonds rose.
- The dollar gained amid risk-off sentiment on coronavirus fears.
- Oil prices dropped and gold rallied.
This 10-year illustration captures the cyclicality of investors' appetite for risk.
Eruption and subsequent clearing of concerns over EU sovereign debt crisis, U.S. debt ceiling, and fear of China hard landing drive major risk sell-off 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: Putnam. Data as of January 31, 2020. 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.