VIX (Market Stress)
16.29
Risk 0/3Contribution
Calm markets (low stress).
Daily Market Regime
LOW RISKScore 2/18Source: Federal Reserve Economic Data · 3d ago
Benign macro backdrop — recession risk minimal, curve healthy, inflation stable. Risk assets are historically favored.
Current market regime: LOW RISK. The macro backdrop is broadly supportive for equities, with calm volatility stress, limited recession pressure, stable labor conditions, and manageable inflation dynamics.
Last updated: May 31, 2026Next expected update: when macro inputs refresh
Transparent scoring across 6 macro inputs (0–3 each). Regimes: 0–4 LOW, 5–8 NEUTRAL, 9–12 ELEVATED, 13–18 HIGH.
Investor takeaway
The current market regime is LOW RISK. Historically, this type of environment has favored risk assets, growth stocks, and momentum strategies in lower-risk states, while elevated-risk states typically reward tighter risk controls and defensiveness.
Low Risk does not mean no market risk. It means the macro indicators tracked by this model are not currently showing broad stress.
What investors may consider now
In a LOW RISK regime:
- Growth and momentum stocks may perform better.
- Broad index exposure can remain reasonable.
- Hedging demand is typically lower while volatility stays contained.
- Watch for yield curve deterioration or rising recession probability.
- Avoid over-concentrating in crowded trades.
This regime model is informational and should be used as a risk-context tool, not as a buy/sell signal.
Explore More
Yield Curve (10Y–2Y)
+0.46%
Risk 1/3Contribution
Flattening curve (late-cycle signal).
10Y 4.48% · 2Y 4.00%
Sahm / Recession Risk
10%
Risk 0/3Contribution
No near-term recession signal.
Sahm Clear · Recession 10%
Real Interest Rate
0.51%
Risk 0/3Contribution
Healthy range (mildly restrictive).
Fed 3.62% − CPI 3.11%
Inflation Trend (CPI)
3.11%
Risk 1/3Contribution
Mild inflation pressure; stay selective.
90d direction: rising
Labor Market
4.3%
Risk 0/3Contribution
Healthy labor market (resilient).
Unemployment 4.3%
Key indicators (context)
GDP Growth
3.07%
Core CPI
2.36%
Retail Sales
$656.1B
Sahm Rule
Clear
Recession Probability10%
Misery Index7.4
Taylor Rule—
Taylor Rule is shown when available; if missing, it is intentionally left blank rather than guessing.
Change from prior reading
Current score
2/18
Previous score
2/18
Regime change
No change
Largest contributor change: No major contributor change.
Regime history
History builds automatically from ClickHouse macro snapshots. Weekly view shown (most recent weeks first).
| Timestamp | Regime | Score |
|---|---|---|
| 2026-05-31 00:00:00 | LOW RISK | 2/18 |
| 2026-05-26 00:00:00 | LOW RISK | 2/18 |
| 2026-05-20 00:00:00 | LOW RISK | 1/18 |
| 2026-05-11 00:00:00 | LOW RISK | 2/18 |
| 2026-05-06 00:00:00 | LOW RISK | 2/18 |
| 2026-04-29 00:00:00 | LOW RISK | 2/18 |
| 2026-04-22 00:00:00 | LOW RISK | 1/18 |
| 2026-04-10 00:00:00 | LOW RISK | 2/18 |
Historically favored in LOW RISK regimes
- Large-cap growth
- Technology and semiconductors
- Consumer discretionary leadership
- Broad market ETFs for diversified exposure
Historical behavior by regime
| Regime | Equities | Growth | Volatility | Hedging Need |
|---|---|---|---|---|
| Low Risk | Favorable | Favorable | Usually lower | Lower |
| Neutral | Mixed | Selective | Moderate | Moderate |
| Elevated | More fragile | Less consistent | Rising | Higher |
| High Risk | Defensive bias | Typically weaker | Elevated | Prioritized |
What this means
No dominant stress input; regime is supported by mostly benign readings.
Historically, growth/momentum strategies tend to do well; avoid over-hedging by default.
Personalized holdings view
Available in the dashboard
How this affects your portfolio
LOW RISK regimes can support staying invested, but portfolio impact depends on your holdings. A concentrated tech portfolio can behave differently from a dividend- or bond-heavy allocation.
What is a market regime?
A market regime is a way of summarizing the macro environment into a single, actionable risk posture. Rather than reacting to individual headlines — one day's CPI print, one week's VIX spike — the regime score aggregates six widely-followed macro inputs into a transparent composite that tells you whether the broad backdrop is broadly risk-on, neutral, or risk-off.
The goal is not to predict where the market goes tomorrow. It is to answer a more useful question: given everything the macro data is showing right now, should an investor be leaning into growth and momentum, staying balanced, or reducing exposure and prioritizing defense? That framing — risk posture, not price prediction — is what makes regime thinking practically useful for portfolio decisions.
AIQ's Daily Market Regime is a rules-based, transparent model. Every threshold is published. Every input is a standard macro series sourced from Federal Reserve Economic Data (FRED) and public market data. There is no black box: the score you see is the direct arithmetic sum of six indicator risk contributions, each scored 0–3, for a maximum possible score of 18.
How the score works
AIQ scores six macro inputs from 0 to 3 risk points each. The six scores are summed for a total out of 18. That total determines the regime label:
- 0–4: LOW RISK — The macro backdrop is broadly benign. Recession signals are absent or subdued, volatility is contained, inflation is stable, and the labor market is healthy. Growth and momentum strategies have historically performed well in this regime.
- 5–8: NEUTRAL — Mixed signals. Some indicators are showing stress while others remain constructive. Position sizing discipline and quality screening matter more than directional bets.
- 9–12: ELEVATED — Multiple macro indicators are flashing caution. Risk controls should be tightened; avoid over-leverage and crowded trades. Hedging becomes cost-effective relative to tail risk.
- 13–18: HIGH RISK — Broad macro deterioration. Historical patterns favor defense, liquidity, and downside management over growth exposure.
The regime updates daily as new macro snapshots land. Some underlying series — like CPI — update monthly, while others like VIX change continuously. AIQ always reflects the latest available reading for each input.
The six indicators explained
Learn more: VIX, yield curve, inflation, recession probability, Sharpe ratio, and risk-adjusted return.
VIX (Market Stress)
The VIX measures the market's implied expectation of 30-day S&P 500 volatility, derived from options pricing. It is the most direct real-time read on investor fear and uncertainty. A VIX below 18 indicates calm, low-stress conditions where market participants are not pricing significant near-term risk. Readings between 18 and 22 represent mild uncertainty — elevated but not alarming. Above 22, volatility is clearly elevated and risk premiums are rising. At 28 or above, the market is pricing acute stress, and historical drawdown risk increases substantially. AIQ scores VIX 0 (below 18), 1 (18–21.99), 2 (22–27.99), or 3 (28 and above).
Yield Curve (10Y − 2Y)
The spread between the 10-year and 2-year Treasury yield is one of the most historically reliable leading indicators of economic stress. A positive spread — longer rates above shorter rates — reflects a normal, growth-supportive environment where the market expects future expansion. When the spread compresses toward zero or inverts (shorter rates exceed longer rates), it signals that markets expect the Fed to cut rates in response to a deteriorating economy. Deep inversions have preceded every U.S. recession since the 1970s. AIQ scores the curve 0 (spread above 0.50pp), 1 (0.00–0.50pp), 2 (−0.25 to 0.00pp), or 3 (below −0.25pp). Note that inversions raise the score even after they begin to normalize — the signal is the inversion itself, not the recovery.
Recession Risk (Sahm Rule + Recession Probability)
AIQ combines two recession indicators and takes the worse of the two readings. The first is a quantitative recession probability model. The second is the Sahm Rule, developed by economist Claudia Sahm, which triggers when the 3-month average unemployment rate rises 0.5 percentage points above its 12-month low — a threshold that has reliably identified the early months of every U.S. recession since 1970. When only a boolean Sahm trigger is available (triggered vs. clear), a trigger maps to 2 risk points; clear maps to 0. This conservative approach avoids false precision when underlying data is limited.
Real Interest Rate
The real interest rate — defined here as the federal funds rate minus CPI year-over-year — measures how tight or loose monetary policy actually is after accounting for inflation. A real rate between 0 and 1.5 percentage points is broadly neutral: the Fed is neither stimulating excessively nor applying heavy braking. Real rates above 2.5pp indicate significant tightening that historically pressures valuations and credit conditions. Deeply negative real rates (below −2.0pp) signal that the Fed is behind the curve on inflation, which creates its own instability. AIQ scores this indicator 0 in the neutral band, 1 for moderate deviation in either direction, 2 for significant deviation, and 3 for extreme readings.
Inflation Trend (CPI)
Inflation is scored on both level and direction, because an accelerating CPI at 2.8% is more concerning than a stable CPI at 4.2%. AIQ evaluates CPI year-over-year level alongside a 90-day directional slope computed from stored macro snapshots. A slope above 0.004 percentage points per day — roughly 0.36pp over 90 days — is classified as rising. A slope above 0.008/day is classified as sharply rising. CPI below 3% and not rising scores 0. CPI between 3% and 4.5%, or rising from below 3%, scores 1. CPI between 4.5% and 6%, or sharply rising, scores 2. CPI above 6% scores 3.
Labor Market
Labor market stress is assessed using the worse of two signals: the unemployment rate level and the 90-day percentage change in initial jobless claims. Taking the worse of the two ensures early deterioration — which often shows up in claims before it registers in unemployment — is captured promptly. Unemployment below 4.5% with stable claims scores 0. Rising unemployment toward 5.5% or claims rising more than 10% over 90 days scores 1. More significant deterioration scores 2 or 3. A healthy labor market is the last line of defense in most economic downturns; when it breaks, the regime typically shifts decisively.
How to use the regime in portfolio decisions
Most investors benefit from regime thinking not by making dramatic all-or-nothing allocation shifts, but by using it as a systematic input to three specific decisions: position sizing, selectivity, and hedging.
In a LOW RISK regime, the historical evidence favors leaning into growth and momentum. Quality screens matter less when the macro tailwind is strong; adding to high-conviction positions and tolerating normal volatility is typically rewarded.
In a NEUTRAL regime, the macro environment offers no strong directional signal. This is when stock selection quality matters most: focus on businesses with durable earnings, avoid crowded trades with thin margin for error, and keep position sizes moderate rather than concentrated.
In an ELEVATED regime, risk controls become the priority. Tightening stop-loss levels, avoiding new positions in high-beta or speculative names, and reviewing concentration in correlated holdings are all appropriate responses. Hedging instruments become relatively cheap when stress is elevated but not yet at peak — waiting until HIGH RISK often means paying maximum premium.
In a HIGH RISK regime, the historical pattern favors defense, liquidity, and downside management over growth exposure. This does not mean selling everything — regime labels are not timing signals, and markets can rally during HIGH RISK periods. It means that the cost of being wrong is higher, so the risk budget should reflect that asymmetry.
The regime does not tell you what to buy or sell. It tells you how much risk the macro environment is currently pricing — and gives you a consistent, data-driven framework for deciding how much of that risk belongs in your portfolio.
Methodology notes
The inputs powering the Daily Market Regime are sourced from the Federal Reserve Economic Data (FRED) API and real-time market data providers. CPI, unemployment, jobless claims, the Sahm Rule, and recession probability models are all publicly available series. The yield curve spread and VIX are derived from live market data.
The scoring thresholds and aggregation methodology are AIQ's own rules-based framework, designed for transparency, consistency, and readability. Every threshold is published on this page. The model does not use machine learning, neural networks, or any black-box optimization — it is a deterministic function of observable inputs applied to fixed, published rules.
When a data series is temporarily unavailable, AIQ scores that indicator conservatively rather than defaulting to zero. A missing VIX reading, for example, is treated as mild uncertainty (1 risk point) rather than assumed calm. This graceful degradation ensures the regime score never overstates safety due to a data gap.
The AIQ Daily Market Regime is an informational model. It is not investment advice, and it is not a guarantee of future market outcomes. All investment decisions involve risk, including the risk of loss of principal.
Get notified when the market regime changes
Track changes in recession risk, inflation pressure, yield curve signals, VIX stress, and labor-market deterioration with account alerts.
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FAQ
What is the current market regime?
The current market regime is LOW RISK, scored 2/18 across six macro inputs: VIX stress, yield curve slope, recession probability, real interest rates, inflation trend, and labor market health. Each input is scored 0–3 risk points; the sum determines the regime label (0–4 LOW, 5–8 NEUTRAL, 9–12 ELEVATED, 13–18 HIGH). The regime reflects the macro backdrop as of the latest available data — not a market prediction.
What does a LOW RISK market regime mean?
A LOW RISK regime means the six macro indicators tracked by this model are collectively mapping to this risk posture. It is a summary of current conditions, not a price forecast. Historically, lower-risk regimes have been more favorable environments for equities and momentum strategies, while elevated-risk regimes reward tighter risk controls and quality screening. Use it to calibrate how much risk belongs in your portfolio right now — not as a buy or sell trigger.
How often is the market regime updated?
The regime score updates daily as new macro snapshots are processed. Fast-moving inputs like VIX and the yield curve reflect intraday or daily market data. Slower inputs — CPI, unemployment, jobless claims — update on their official release schedules (monthly or weekly). AIQ always uses the latest available reading for each input; the timestamp shown at the top of the page indicates when the most recent snapshot was processed.
Which indicators drive the regime score?
Six indicators, each scored 0–3: VIX (market volatility stress), yield curve (10Y minus 2Y Treasury spread — a historically reliable recession predictor), recession risk (Sahm Rule plus recession probability model, taking the worse of the two), real interest rate (fed funds rate minus CPI YoY — measures how tight monetary policy actually is), inflation trend (CPI level and 90-day directional slope), and labor market (unemployment rate and jobless claims trend). The six scores are summed for the total out of 18.
Does Low Risk mean stocks cannot fall?
No. Low Risk means the macro indicators tracked by this model are not currently showing broad stress — not that markets are immune to declines. Stocks can fall in any regime due to earnings misses, valuation resets, geopolitical shocks, liquidity events, or company-specific risk that has nothing to do with the macro backdrop. The regime tells you whether the macro environment is supportive or hostile; it does not tell you what any individual stock or the index will do tomorrow.
Is this a published academic framework or AIQ's own methodology?
The individual inputs — VIX, yield curve inversion, the Sahm Rule, CPI, real rates, and labor market indicators — are all widely-used macro signals backed by decades of academic and practitioner research. The scoring thresholds and aggregation method are AIQ's own transparent, rules-based framework, designed for consistency and readability. Every threshold is published on this page; there is no black box. The model is deterministic: the same inputs always produce the same score.
Why do some fields sometimes show "—"?
When a data series is temporarily unavailable — due to a provider delay, a scheduled release gap, or a processing lag — AIQ displays a dash rather than fabricating a value. The scoring model degrades gracefully: a missing input maps to a conservative estimate rather than defaulting to zero, so the regime score never artificially understates risk because of a data gap. The source timestamp at the top of the page reflects when the most recent complete snapshot was processed.
Can the regime be wrong?
Yes — no macro model is perfectly predictive. Markets can rally during HIGH RISK regimes and correct during LOW RISK ones, because the regime captures the macro backdrop, not every driver of short-term price movement. The model is most useful as a consistent framework for calibrating risk posture across market cycles, not as a short-term signal. Over long samples, HIGH RISK regimes have been statistically associated with elevated drawdown risk — but individual assets, timeframes, and market events vary widely.
How is this different from the Fear & Greed Index or other sentiment tools?
Sentiment tools like the Fear & Greed Index measure investor psychology — how market participants are currently feeling, based on price momentum, options positioning, and survey data. The AIQ Market Regime measures fundamental macro conditions: inflation dynamics, recession risk, monetary policy stance, and labor market health. These are slower-moving signals that reflect the structural environment equities operate in — they change when the economy changes, not when prices move. The two approaches are complementary: sentiment tells you what traders are doing right now; regime tells you what the macro backdrop is.