Fourth quarter’s steep decline appeared overdone as markets rallied despite further downgrades to global growth expectations, softening corporate earnings results, and heightened geopolitical risks.

Volatility increased dramatically last quarter as tightening financial conditions, global growth concerns, and tempestuous political developments weighed on investor sentiment. Several major US and non-US equity indexes either approached or entered bear market territory amid the risk-off environment.

Global risk assets suffered significant drawdowns in October as capital markets experienced a fresh bout of volatility.

Global risk assets suffered significant drawdowns in October as capital markets experienced a fresh bout of volatility.

Developed markets equities and high-yield bonds led capital markets returns in third quarter, as US stocks outperformed on superior macroeconomic and corporate earnings growth. In stark contrast, emerging markets equities entered a technical bear market, underperforming developed markets equivalents as index heavyweight China lagged.

Most global risk assets faltered in August, with the notable exception of US equities, which almost single-handedly drove gains in developed markets stocks; in contrast, emerging markets equivalents suffered further losses.

Equities led the resurgence in risk assets last month, as US/EU trade tensions abated for now and robust global corporate results continued to reflect healthy underlying fundamentals.

Capital markets performance during second quarter was generally positive, consistent with broad-based economic growth and mostly healthy corporate fundamentals, but negative geopolitical developments generated some weakness in certain market segments.

Capital markets performance during May was mixed, impacted by a number of important geopolitical developments.

Capital markets were mixed in April as global risk assets generally advanced, while bonds mostly declined.