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Risk Aversion Index

Nov 07 2019

Risk Aversion Index: New “Lower Risk” Signal

  • Nov 7, 2019

We are turning favorable again toward credit, especially emerging market sovereign debt.

Oct 04 2019

Risk Aversion Index: Fell But Stayed On “Higher Risk” Signal

  • Oct 4, 2019

Recent data has certainly increased the risk of an imminent recession, but more confirmation is needed to move us into the recession camp.

Sep 07 2019

Risk Aversion Index: Stayed On “Higher Risk” Signal

  • Sep 7, 2019

More and more signs are pointing to investors’ loss of confidence in central banks’ ability to revive the global economy. We maintain “neutral” on all credit classes.

Aug 06 2019

Risk Aversion Index: Stayed On “Higher Risk” Signal

  • Aug 6, 2019

A hawkish Fed cut, immediately followed by Trump’s new tariffs, caused quite a bit of market indigestion, a clear reminder of how quickly things can change.

Jul 04 2019

Risk Aversion Index: Stayed On “Higher Risk” Signal

  • Jul 4, 2019

Our Risk Aversion Index fell in June but stayed on the “Higher Risk” signal generated in May.

May 07 2019

Risk Aversion Index: Maintains “Lower Risk” Signal

  • May 7, 2019

Our Risk Aversion Index ticked lower in April and stayed on the “Lower Risk” signal. Most risky assets participated and the rally was broad-based. The only fly in the ointment is EM assets. The recent weakness in both Chinese stocks and the Yuan is certainly worth paying attention to.

Apr 05 2019

Risk Aversion Index: Stayed On “Lower Risk” Signal

  • Apr 5, 2019

With most major central banks now turning dovish, our view on credit is more constructive. We still view pull-backs in EM assets as better entry points. Investment grade corporate bonds are also attractive, and we maintain a neutral view on Munis and High Yield bonds.

Mar 06 2019

Risk Aversion Index: Stayed On “Lower Risk” Signal

  • Mar 6, 2019

While global central banks’ dovish turn provides a supportive backdrop for the risk rally, short-term overbought conditions are everywhere too.

Feb 07 2019

Risk Aversion Index: New “Lower Risk” Signal

  • Feb 7, 2019

With the Fed now pausing its rate hikes, and the PBoC recapitalizing banks and reactivating lending, our view on credit has turned from defensive to neutral, with a more constructive bias. One of our biggest concerns, global central bank liquidity withdrawal, has been eased by the recent policy moves.

Jan 08 2019

Risk Aversion Index: New “Higher Risk” Signal

  • Jan 8, 2019

Despite some near-term oversold conditions in risky assets, we continue to recommend defense and expect higher volatility to remain across all asset classes.

Dec 07 2018

Risk Aversion Index: New “Lower Risk” Signal

  • Dec 7, 2018

Despite the recent signal whipsaws, we have been cautious toward all risky assets and we continue to recommend defense amid higher volatility across all asset classes.

Nov 07 2018

Risk Aversion Index: New “Higher Risk” Signal

  • Nov 7, 2018

We have been leaning toward the defensive side despite the recent signal whipsaws and we continue to recommend caution in light of the increase in volatility across all asset classes.

Oct 05 2018

Risk Aversion Index: New “Lower Risk” Signal

  • Oct 5, 2018

Our Risk Aversion Index fell sharply last month and triggered a new “Lower Risk” signal. Caution is still strongly recommended, and we favor higher-quality credit within fixed income.

Sep 07 2018

Risk Aversion Index: New “Higher Risk” Signal

  • Sep 7, 2018

Our Risk Aversion Index reversed higher last month and triggered a new “Higher Risk” signal. We recommend a defensive stance within fixed income.

Aug 06 2018

Risk Aversion Index: A New “Lower Risk” Signal

  • Aug 6, 2018

Our Risk Aversion Index fell enough last month to generate a new “Lower Risk” signal. This is certainly not a “no brainer” risk-on signal. We recommend higher quality spread products within fixed income.

Jul 07 2018

Risk Aversion Index: Stayed On “Higher Risk” Signal

  • Jul 7, 2018

We believe the negative impact of central bank liquidity reduction is here to stay for the foreseeable future. We recommend defense within fixed income.

Jun 07 2018

Risk Aversion Index: Stayed On “Higher Risk” Signal

  • Jun 7, 2018

Volatility among non-equity asset classes has gone up noticeably while the VIX dipped lower. We still expect volatility to stay high and continue to play defense within fixed income.

May 05 2018

Risk Aversion Index: Stayed On “Higher Risk” Signal

  • May 5, 2018

We expect volatility to stay high and still recommend defensive positions within fixed income.

Apr 06 2018

Risk Aversion Index: Stayed On “Higher Risk” Signal

  • Apr 6, 2018

While concerns about a trade war might be easing and the credit market has been largely unaffected by the surge in Libor rates, we have to recognize the fact that Trump’s policy focus has become increasingly market-unfriendly while global central banks are in a liquidity-reducing mode.

Mar 07 2018

Risk Aversion Index: A New “Higher Risk” Signal

  • Mar 7, 2018

While the late rebound in risky assets pared back earlier losses, weakness was observed in all major risk asset classes. We continue to recommend defense for the time being.

Feb 06 2018

Risk Aversion Index: Turned Higher But Stayed On The “Lower Risk” Signal

  • Feb 6, 2018

Our Risk Aversion Index turned higher last month but stayed on the “Lower Risk” signal as of the end of January. The first few days of February brought a big surge in this index and would suggest a “Higher Risk” stance for the near term.

Jan 06 2018

Risk Aversion Index: New “Lower Risk” Signal

  • Jan 6, 2018

Our Risk Aversion Index turned lower in December and reached an all-time low. We remain favorable toward higher quality credit within fixed income.

Dec 07 2017

A New “Higher Risk” Signal

  • Dec 7, 2017

The index ticked up on the back of higher VIX, a High Yield credit mini sell-off, and EM underperformance. We are turning a bit more cautious toward credit but still recommend safe spreads within fixed income.

Nov 07 2017

RAI Stayed On “Lower Risk” Signal

  • Nov 7, 2017

The range-bound interest rate action provides a friendly environment to earn the carry, through moderate duration and high grade credit exposure.

Oct 05 2017

Risk Aversion Index: Stayed On The “Lower Risk” Signal

  • Oct 5, 2017

We believe the “Goldilocks” environment is still intact. Earn the carry.

Sep 08 2017

Risk Aversion Index: Stayed On The “Lower Risk” Signal

  • Sep 8, 2017

With the “Goldilocks” scenario still intact, we believe earning the carry is the right approach and high grade credit fits the bill.

Aug 04 2017

Risk Aversion Index: Stayed On The “Lower Risk” Signal

  • Aug 4, 2017

With neither inflation nor recession an imminent threat, the “Goldilocks” scenario remains intact. We continue to view high grade credit favorably within the fixed income space.

Jul 07 2017

Risk Aversion Index: New “Lower Risk” Signal

  • Jul 7, 2017

“Lower Risk” signal closed out the “Higher Risk” signal generated five months ago. We’re encouraged by the resilience in risky assets during the oil sell-off and the late surge in global bond yields. We’ve been favorable toward high-grade credit and maintain this view within the fixed income space.

Jun 07 2017

Risk Aversion Index: Still On “Higher Risk” Signal

  • Jun 7, 2017

The global risk rally is broad-based enough to justify a favorable credit view and we still believe higher quality credit offers better reward/risk.

May 05 2017

Risk Aversion Index: Still On “Higher Risk” Signal

  • May 5, 2017

Last month, we recommended going up in quality within fixed income and we maintain this cautious stance for the time being.

Apr 07 2017

Risk Aversion Index: Still On “Higher Risk” Signal

  • Apr 7, 2017

We recommend going up in quality across the whole fixed income spectrum.

Mar 07 2017

Risk Aversion Index: Stayed On The “Higher Risk” Signal

  • Mar 7, 2017

While we continue to view spread products favorably within fixed income, the March rate hike has yet to have its impact play out. In the near term, we will respect the “higher risk” signal and exercise caution.

Feb 07 2017

Risk Aversion Index: A New “Higher Risk” Signal

  • Feb 7, 2017

This new signal is mostly due to a much lower reading three months ago.

Sep 08 2016

Risk Aversion Index– Stayed On “Lower Risk” Signal

  • Sep 8, 2016

Given the not-too-hot-not-too-cold macro backdrop, we expect the credit rally to continue in the near term and favor spread products within fixed income.

Aug 04 2016

Risk Aversion Index—New “Lower Risk” Signal

  • Aug 4, 2016

We expect the search for yield to continue in the near term and favor Higher Quality credits within fixed income.

Jul 07 2016

Risk Aversion Index—New “Higher Risk” Signal

  • Jul 7, 2016

With global bond yields plumbing new all-time lows, we continue to favor Higher Quality credits within fixed income.

Jun 07 2016

Risk Aversion Index—Ticked Up But Stayed On “Lower Risk” Signal

  • Jun 7, 2016

The real test for risky assets lies immediately ahead with central bank meetings, the Brexit vote, and the Spanish election later in the month. We continue to favor Higher Quality credits within fixed income.

May 06 2016

Risk Aversion Index—Stayed On “Lower Risk” Signal

  • May 6, 2016

After the last couple months’ strong surge, risky assets are entering a seasonally unfavorable period, with Brexit looming particularly large in the near term. We still favor higher quality credits within fixed income.

Mar 07 2016

Risk Aversion Index—Ticked Lower But Stayed On “Higher Risk” Signal

  • Mar 7, 2016

We believe a short term rally is more likely and recommend a neutral stance towards credits at this point.

May 07 2015

Risk Aversion Index Fell Sharply, Generated A New “Lower Risk” Signal

  • May 7, 2015

Favor credits within fixed income in the near term but beware of volatility ahead