You can say it: “Risk On, Risk Off.”
Go ahead and make Mr. Miyagi Karate Kid jokes (we certainly did), but you’ll hear this phrase more often as commentators gauge the economic mood under President Trump.
When optimism is high and corporate earnings grow, investors get their “risk on”—they’re more willing to buy volatile assets like stocks. When investors feel grimmer, they go “risk off” and chase safer assets like bonds and gold.
In the Obama years, investors behaved as though risk was on and off, driving prices up for stocks and bonds alike. So far under Trump, the old binary model appears to have returned. That explains why bond prices have been falling (and their yields have been rising) even as stocks enjoy the sugar-fueled surge of the post-election rally.
A version of this article appears in the March 15, 2017 issue of Fortune with the headline “Risk on and off.”
