Month: March 2018

Markets – March 2018

Following January’s equity melt-up, February saw the sharpest equity reversal in seven years as “warmer” economic reports and the enactment of additional fiscal stimulus triggered U.S. inflation fears. The unwinding of various flavors of short volatility strategies—risk parity, commodity trading advisors (CTAs), short volatility exchange traded funds (ETFs), and targeted volatility insurance products—contributed to the speed of the decline, as the VIX (equity volatility index) reached its highest levels since 2015. Global equities fell 4% uniformly across segments; bonds were unable to serve as a portfolio anchor, losing 1%, as it is hard for a hedge to be effective when it is the catalyst for the equity market decline. The dollar ended higher after a volatile month, while weak energy prices weighed on the commodity complex.

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POSTED IN: Market Perspectives