Fear is slipping away from the fixed-income market. Investors are taking on more risk by buying high-yield bonds. Increased prices drive yields down, and the spread of lower-quality bonds over ten-year treasuries collapses. Fixed-income investors, tired of historically low treasury yields, are buying riskier bonds.

Equity investors, too, can take advantage of this improved sentiment by adding risk to their portfolios. This can take the form of adding to equities from cash positions. Another strategy could be moving into more volatile stocks with lower dividends that cushion the price.