Risk Assets Are Sending Their Strongest Message in Years 📣
By Grant Hawkridge
June 3, 2026
Today's number is... 1.3
The market's appetite for risk just reached its strongest level in roughly five years. The Risk On / Risk Off Indicator climbed to 1.3, breaking above a ceiling that had capped advances for years.
Here’s the chart:
Let's break down what the chart shows:
The chart displays the S&P 500 in the upper panel in black.
The lower panel displays the Risk On / Risk Off Indicator in black.
The Takeaway: The Risk On / Risk Off Indicator just reached its highest level since 2021.
That's a big change from where this indicator was just over a year ago.
During the 2025 correction, it fell into its risk-off zone as investors moved away from risk assets and toward defense. At the time, the message from the model looked very different.
That weakness didn't last.
The indicator recovered, moved back above its neutral level, and continued climbing. Now it sits above every peak from 2023, 2024, and 2025. After spending years failing near the same level, it has finally broken through.
The move higher has also accelerated. The slope of the indicator is steeper today than it was earlier in the recovery. Risk appetite isn't just improving. The rate of improvement is accelerating.
And this isn't coming from a single corner of the market.
Credit, currencies, commodities, growth stocks, small caps, emerging markets, and cyclical assets are all contributing. Multiple asset classes are moving in the same direction at the same time.
That's why this looks more like the environment we saw during the 2021 bull market than the choppier conditions that dominated much of 2024.
When risk appetite is expanding across multiple asset classes at the same time, I'm generally thinking about how to stay aligned with that trend rather than looking for reasons to fight it.
That doesn't mean chasing every rally or ignoring signs of excess. But as long as this indicator continues moving higher, I view that as evidence that investors remain willing to take risk and that the broader backdrop continues to support risk assets.
