The second quarter of 2022 saw equity markets finish lower for a second straight quarter. The decline in the S&P 500 in the first half of 2022 has been the largest since 1970. Inflation concerns were the biggest drag on risk sentiment in the second quarter.
We open another quarterly commentary with a discussion of just how bad the quarter was for fixed income markets. At the same time, however, a host of metrics suggest that many fixed income valuations are as attractive as they have been in several years. While we think caution and patience are the operative words in the spread sectors, we note some extreme dollar price drops given the movement in both rates and risk premia over the course of 2022.
Q1 2022 saw the largest one quarter outperformance of international value in twenty years, and yet 93% of international value managers underperformed the international value benchmark.1 While the disruption of commodity markets from the invasion of Ukraine led to outsized returns in commodity sensitive stocks …
There are decades when nothing happens and there are weeks when decades happen. The last three years and particularly the weeks since February 24th have coughed up more so-called ‘tail-risk’ events than the entire pre-pandemic decade!
As we close what has been among the most tumultuous quarters in fixed income history, we are struck by the fact that we are about to discuss interest rate moves and total returns of historic magnitude. Unfortunately, the past two years have led us to utter similar statements rather often.
US equities came under pressure in the first quarter of 2022 with the S&P 500 suffering its first quarterly decline since the depths of the pandemic in March 2020. While the Fed’s hawkish policy pivot dominated the headlines …
