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Asset Class Reports
Canterbury's Outlook: First Quarter 2018

Volatility Makes a Comeback

  • Last year’s market optimism continued through most of January, however, most equity markets pulled back significantly in February and once again in March. 2018 has seen more 1% swings in the market than in all of 2017 combined. The Volatility Index, which settled near all-time lows in 2017, spiked to a high in February, a level seen only once in the last five years.
  • U.S. equities were slightly negative in the quarter as volatility increased and trade policy and inflation concerns loomed. International developed equities were negative for the quarter and emerging markets equities were the one bright spot in the equity space; emerging markets were supported by a weaker US dollar and stable commodity prices and finished up 1% for the quarter.
  • U.S. core fixed income was negative over the quarter as interest rates moved higher on the back of the Fed’s more “hawkish” stance. An increase in volatility also hurt investment grade and high yield corporate bonds. Moreover, corporate bonds that had longer maturities underperformed their shorter maturity counterparts given the move up in rates. Non-U.S. developed bonds did well as rates stayed range-bound. Emerging market debt, both in hard and local currency, continued to perform as the growth picture improved.
  • Oil prices rallied over the quarter as global demand remained robust. Commodities were slightly negative as trade war concerns put pressure on the complex.

To view the First Quarter Reports, click on the links below: