Oct 2019 | Q3 Takeaways
Sep 2019 | Volatility
Jul 2019 | Q2 Takeaways
Jun 2019 | Treasury Yield Curve
May 2019 | Rolling Returns
Key Takeaways - Fourth Quarter 2018
By Ralph Goldsticker, CFA | 11 January 2019
Expectations of slower growth, tighter monetary policy and heightened political risks resulted in high volatility and stock market declines.
Stock markets declined around the globe, and Treasuries rallied.
VIX spiked, and remains elevated.
Future performance will depend on growth expectations stabilizing, and on political uncertainty being contained.
Policy and economic uncertainty persist around the globe.
Economic growth is decelerating in the US, and is weaker around the globe.
Changes in short-term interest rates in 2019 by the Fed are less certain, and will depend on the economy.
Trade conflicts, BREXIT and growth of populist politics continue to introduce uncertainty.
The direction of longer-term interest rates will depend on underlying economic conditions.
Despite low unemployment and rising and wages, inflation remains under control. Government budget deficits remain a longer-term concern.
During the quarter, decelerating growth and rising political and policy risks caused risk-free rates to fall and credit spreads to widen.
Over the longer-term we continue to expect low but positive returns from bonds - roughly in line with their current yields. Any capital losses from rate increases will be offset by higher reinvestment rates.