Risk-Off
A market sentiment regime where investors flee to safety — selling equities and high-yield assets in favor of government bonds, gold, and haven currencies.
Risk-off describes a market environment where fear or uncertainty drives investors to sell higher-risk assets and pile into safe havens. Classic risk-off moves: equities down, VIX up, Treasury yields down (prices up), yen up, dollar up (often), gold up, credit spreads widen.
Risk-off regimes can be triggered by recession fears, geopolitical shocks, central bank surprises, financial system stress, or a sharp deterioration in economic data. During deep risk-off episodes, correlations between assets converge — almost everything gets sold except the deepest haven assets.
On the desk
During the March 2020 COVID crash, equities dropped 35% in three weeks while the dollar surged, Treasury yields plunged, and gold initially sold off (liquidity crunch) before spiking to new highs as the Fed intervened.