Major volatility in markets continued this week with a defined correction taking place in stocks to mark the worst week in two years. Among the list of catalysts being discussed surrounding the event, inflation remains a prime suspect; consumer price information will be closely watched next week with concern that rising prices, and what has been a robust labor market, will give the Federal Reserve more reason to ramp up tightening. The market turbulence was a backdrop for the start of the PyeongChang 2018 Olympic Winter Games with opening ceremonies taking place on Friday the 9th and to conclude on February 25th.
Major indices across the globe saw correlations increase during this time of stress as domestic markets tumbled over 5% and erased the remaining YTD gains. The Dow Jones Industrial Average swung at least 1000 points in all but one trading day and remarkably changed direction 53 times. Peak to trough losses were as great as 12% and volatility measured by the VIX ended the week almost three times higher than what it closed at January 26. Fixed income investments weren’t met with much favor either as interest rates remain near multi-year highs and major alternative investments were not enough to hedge against declines.
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