by Connor Darrell CFA, Assistant Vice President – Head of Investments

It was a volatile week for global equities, as trade tensions, geopolitics, and movements in the yield curve stoked fears of further weakening in the global economy. By far the biggest influence on market returns during the week was the inversion of the 10-year and 2-year treasury rates; which has historically been viewed as a recession warning. The ensuing shift in sentiment pushed equity markets into a selloff and provided further support for a bond market which has rallied strongly over the past 12 months. In fact, last week marked the first time in history that the 30-year U.S. treasury rate dropped below 2%; a sign that investors are questioning whether the economy will be able to return to previously achieved long-term growth rates. 

While it is likely that the future opportunities for investors will be fewer and farther between than in recent history, we remain cautiously optimistic that a trade deal will be achieved and that the confusion and uncertainty the trade tensions have caused will eventually be lifted. The timing of any deal remains entirely uncertain, but it is that uncertainty that makes it all the more important for investors to remain disciplined. We provide our current thinking on the recent volatility, the ongoing trade war, as well as the yield curve inversion in our most recent market note.