
The 1×1 of risk perception measures
There are two reasons why macro traders watch risk perceptions. First, sudden spikes often trigger subsequent flows and macroeconomic change. Second, implausibly high or low values indicate risk premium opportunities or setback risks. Key types of risk and uncertainty measures include [1] keyword-based newspaper article counts that measure policy and geopolitical uncertainty, [2] survey-based economic forecast discrepancies, [3] asset price-based measures of fear and uncertainty and [4] derivatives-implied cost of hedging against directional risk and price volatility.