Sentiment is now the most bullish in five years — which means the bar for “good news” to keep pushing markets higher is rising.
It’s been a turbulent few days in a few pockets of markets. But just as the precious-metals rally stayed relatively contained, so has the sell-off. Broader risk has held up well — the S&P 500 closed yesterday within a few points of its all-time high
At the same time, sentiment has kept grinding higher. Because equities have risen slowly, the sentiment shift has been gradual too — but lots of small moves in the same direction eventually add up.
Our Risk-on / Risk-off Sentiment Matters Aggregate has reached 66 for the first time since 2021, and it’s now above the highs of 2024. That’s not quite in the zone that’s historically been followed by poor returns — but it is getting closer to ~70, where our baseline would be to turn more cautious.
