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Research Perspective Vol. 74

The main theme of markets in February is volatility. Volatility is back in equity markets and is spreading across other asset classes, highlighting the need for uncorrelated strategies in stressful periods. The first two weeks of February saw stocks declining with large intra-day market swings. Potential drivers of the global equity sell-off are the expectation of rising rates due to higher inflation alongside market corrections on high valuations caused by recent years’ bullish sentiment. This sell-off led investors in treasuries’ “safe haven” and treasury yields slightly declined. Amid this shift in the economic environment, hedge funds failed to capitalise on...