CS Global Risk Appetite Signals Risk-Off As Sentiment Stays In 'Panic' Mode
Credit Suisse has been producing country-specific and global risk appetite indices for years, offering a quick-and-dirty perspective on the market participant sentiment in global risk assets. By empirically tracking the relationships between 'safe' and 'risky' asset classes, they have created a useful contemporaneous view of current market perceptions. The index swings between euphoria and panic modes and shifted to full-scale panic around mid-year. Since then the index has gradually improved as the psychological bias of 'it can't get any worse, right?' seems to have kicked in until recently where CS notes a recent downturn. So while we have 'improved' back to only Panic Mode, the expectations are for a prolonged risk-off session in the short- to medium-term.
Short-term, CS sees risk-off as the Global Risk Appetite Index turns back down shy of Panic Mode...
and longer-term shows just how 'deep' a panic this most recent case was - and obviously given CS's perspective, how it will dip back down again.
The primer on Credit Suisse Global Risk Appetite indices is below: