diff --git a/contracts/signals.schema.json b/contracts/signals.schema.json
index 1956a55..d321abe 100644
--- a/contracts/signals.schema.json
+++ b/contracts/signals.schema.json
@@ -20,8 +20,8 @@
     },
     "market_regime": {
       "type": "string",
-      "enum": ["bull", "neutral", "caution", "bear"],
-      "description": "Current market regime assessment"
+      "enum": ["bull", "neutral", "bear"],
+      "description": "Current market regime assessment. 3-class Ang-Bekaert taxonomy (v0.42.0 / 2026-05-28). Legacy 4-class 'caution' retired per caution-regime-retirement-260528.md — its driving signals (VIX, HY OAS, SPY 30d return) are weighted continuously into regime_intensity_z (predictor META_FEATURE 13) rather than discretized into a 4th category. Portfolio-protective hysteresis is a separate axis on the predictor drawdown leg (risk_on/caution/risk_off). Historical signals.json artifacts with 'caution' in market_regime are grandfathered — consumers tolerant of legacy enum on read."
     },
     "sector_ratings": {
       "type": "object",
diff --git a/tests/integration/test_data_contract_validation.py b/tests/integration/test_data_contract_validation.py
index d41c944..c99cf61 100644
--- a/tests/integration/test_data_contract_validation.py
+++ b/tests/integration/test_data_contract_validation.py
@@ -69,6 +69,41 @@ def test_missing_required_field_fails(self):
         with pytest.raises(ValidationError):
             validate(instance=bad_signals, schema=schema)
 
+    def test_market_regime_enum_is_3class(self):
+        # 3-class Ang-Bekaert taxonomy (v0.42.0 / 2026-05-28).
+        # Legacy 4-class "caution" retired per
+        # caution-regime-retirement-260528.md.
+        schema = _load_schema("signals.schema.json")
+        regime_field = schema["properties"]["market_regime"]
+        assert regime_field["enum"] == ["bull", "neutral", "bear"]
+
+    def test_market_regime_caution_rejected(self):
+        schema = _load_schema("signals.schema.json")
+        bad_signals = {
+            "date": "2026-04-03",
+            "run_time": "00:30:00",
+            "market_regime": "caution",
+            "sector_ratings": {},
+            "universe": [],
+            "buy_candidates": [],
+        }
+        with pytest.raises(ValidationError):
+            validate(instance=bad_signals, schema=schema)
+
+    def test_each_3class_regime_accepted(self):
+        schema = _load_schema("signals.schema.json")
+        for regime in ("bull", "neutral", "bear"):
+            signals = {
+                "date": "2026-04-03",
+                "run_time": "00:30:00",
+                "market_regime": regime,
+                "sector_ratings": {},
+                "universe": [],
+                "buy_candidates": [],
+            }
+            # Should not raise
+            validate(instance=signals, schema=schema)
+
 
 class TestPredictionsContract:
     def test_valid_predictions_pass(self):