Chart of the Month: Year-to-Date Recovery from Q4 2018 Sell-Off
Risk assets have staged a remarkable rebound in 2019, with many asset classes erasing three quarters or more of the losses they experienced in the 4th quarter of 2018. While many of the factors contributing to the panic driven sell-off late last year remain a concern for 2019 and beyond, the abrupt change in tone from Fed policymakers in early January has clearly calmed the markets. With Fed officials calling off future interest rate increases earlier than expected, fears of a Fed-induced recession have subsided and markets have stabilized from their rout last year. The Fed’s pause in its tightening cycle has been cheered by the equity and high-yield markets and they are off to one of their best starts yet in the new year.
*Indices: REITS: DJ U.S. Select REIT, High Yield Bond: ICE BofAML US High Yield, Emerging Markets: MSCI EM NR USD, Technology: S&P 500 Sec/Information Technology, Large Blend: S&P 500, Small Cap Blend: Russell 2000, Foreign Developed: MSCI World ex USA NR USD, Energy Sector: S&P 500 Sec/Energy, Commodities: Bloomberg Commodity
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