Equity Risk Premium In the U.S., the equity risk premium has shrunk to the point where stocks barely compensate investors for taking risk over bonds. That weakens the bull case for equities and sets the stage for more disappointment. Image: The Daily Shot
Risk Appetite Indicator Level and Momentum Factors Goldman Sachs’ Risk Appetite Indicator has pushed back into stretched territory as investors pile into higher-risk bets. Upside still exists, but crowded positioning raises the odds of a near-term pullback. Image: Goldman Sachs Global Investment Research
Global Market Implied Equity Risk Premiums In the U.S. and Japan, the equity risk premium has shrunk so much that stocks barely pay investors for taking extra risk over bonds. That makes the case for equities tougher to sell and heightens the chance investors end up frustrated. Image: Goldman Sachs Global Investment Research
Global Cross Asset Risk Sentiment Global investors are firmly risk-on, but sentiment is constructive rather than euphoric, keeping the door open to further gains. Image: TS Lombard
Sentiment – Risk Appetite and Expected U.S. Equity Market Performance Risk appetite among U.S. equity fund managers has surged to its highest level this year, buoyed by easing Middle East tensions and continued resilience in corporate earnings and the broader economy. Image: S&P Global Market Intelligence
Risky vs. Safe Assets Fund Flows As confidence returns, cash is pouring into risk assets while safer funds sit on the sidelines, pointing to a robust appetite for higher-return bets. Image: Goldman Sachs Global Investment Research
10-Year Rolling Annualized Equity vs. Bond Performance (Ex Post Equity Risk Premia) On a 10-year rolling annualized basis, U.S. equities have outperformed bonds by one of the widest margins since the 1920s and 1950s. Image: Goldman Sachs Global Investment Research
U.S. Equity Risk Indicator The U.S. Equity Risk Indicator is at a level that has historically pointed to weakness over the short to intermediate term. But markets can stay stretched far longer than logic suggests, then break down much faster than anyone expects. Image: BCA Research
GS Risk Appetite Indicator and U.S. Equity Momemtum 1-Year Z-Score When risk appetite and momentum run too hot, like today, future equity returns typically fade under the weight of easy optimism. Image: Goldman Sachs Global Investment Research
Bloomberg Dollar Index One-Month Risk Reversals Currency markets are turning defensive, as demand for dollar upside and protection against violent swings gains pace amid Middle East tensions. Few things spook investors like uncertainty, and the greenback remains their safe haven. Image: Bloomberg
S&P 500 Return Around 7 Major Geopolitical Risk Events The S&P 500’s 5% slide from its January peak mirrors the market’s typical pullback after major geopolitical shocks. Many investors see the turbulence as temporary, betting that history’s pattern of quick recoveries will hold. Image: Goldman Sachs Global Investment Research