Q4 2018
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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.
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Stock markets declined around the globe, and Treasuries rallied.
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VIX spiked, and remains elevated.
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Future performance will depend on growth expectations stabilizing, and on political uncertainty being contained.
Policy and economic uncertainty persist around the globe.
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Economic growth is decelerating in the US, and is weaker around the globe.
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Changes in short-term interest rates in 2019 by the Fed are less certain, and will depend on the economy.
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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.
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Despite low unemployment and rising and wages, inflation remains under control. Government budget deficits remain a longer-term concern.
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During the quarter, decelerating growth and rising political and policy risks caused risk-free rates to fall and credit spreads to widen.
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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.