Volatility

Category: Quant Insight

Volatility among stocks continues to step lower, a positive sign for future potential returns. However, bond and currency risk are approaching historic highs both long-term and short-term. We believe the wild rise in Treasury rates in the fourth quarter of 2017 is likely to continue and doesn’t paint a pretty picture for bonds going forward.

Market volatility is an indicator of financial stress. Low or declining volatility environments may indicate favorable periods for equity investments, whereas rising volatility periods may favor sovereign debt and developed market currency exposure.

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