• Amid the volatility experienced in Q4 2018, the performance of equity and fixed income markets reflected rising investor risk aversion as equities sold off and Treasuries rallied.
  • So far in 2019, however, equity and fixed income performance tell a tale of diverging market views. While the S&P 500 has recovered all of its Q4 decline, bond markets reflect a more cautious outlook.
  • Prior to the May pullback in the equity markets, the S&P 500 returned 18.2% through April 30. Even with the May decline, the S&P 500 has returned 15.6% year to date amid generally positive employment data and a strong, yet cautious, consumer.1
  • Meanwhile, government bond yields have steadily declined in 2019 and this week nearly touched their March lows. In fact, the 3M-10Y Treasury yield curve briefly inverted this week for the second time since March as demand for safe-haven assets drove down the yield of the 10-year Treasury.2
  • Fresh tariffs and a breakdown of trade negotiations injected a fresh bout of volatility into the markets this month amid a year in which volatility has otherwise been low. As the U.S. economic expansion ages and policy uncertainty remains, equity and fixed income markets may reflect differing outlooks – yet all investors would be wise to prepare for periods of uncertainty and the volatility they often create.

1 As of May 17, 2019.
2 Bloomberg, as of May 16, 2019.


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