The Geopolitical Risk Index has fallen to 135. That’s down from the spike up to 500 at the start of the war, well below the historical buy threshold for equity markets of 300 and not far above the long-term historical average of 100.
The Geopolitical Risk Index (GPR) (Caldara & Iacoviello) is a news-based measure tracking how often major newspapers reference wars, threats and terrorism, normalised so 100 = long-run average.
It’s a great measure of the geopolitical risk premium.
The decline is in line with the historical pattern. This is normal! GPR fades as the initial shock wears off and equity markets recover. Unless there’s escalation, people adapt. Ukraine is the obvious recent example.
But the bigger-picture point is still: we remain in a world of elevated geopolitical risk. The 1-year average GPR has been above its long-term average of 100 since 2022 — before “Trump 2.0” — and continues to trend higher, closing in on early-1990s peaks.