Market Comment – Risk on - Redux

After an unusually quiet two-year period, investors were once again reminded that volatility is part and parcel of the investment process. Global stocks suffered their worst week since 2016 and the sixth worst overall week since the recovery began in 2009. More importantly, bond prices also fell, as did other traditionally safer assets such as gold. This breakdown in correlations is reminiscent of the “risk on-risk off” period we experienced up until 2015, where central bank intentions had a broad impact on assets, frustrating the asset allocation process. Although we are not still anywhere near the end of the “easy money era”, with the system still flush with liquidity, we do believe that markets may be concerned with the new Fed’s more detached approach concerning market volatility.

David Baker – CIO