BNY Capital Market Perspectives

Wake me up when September begins

Rather than the late summer doldrums, August has proven unusually active. With various volatility measures starting the month at or near multi-year lows, last week’s geopolitical flare-ups drove some of the largest percentage jumps in these indices since the US election.

In an all too familiar pattern, market fear quickly faded as most asset classes have returned to levels prior to the tete-a-tete between the US and North Korea. As the attached table indicates, the initial movements towards lower yield, falling equity values and a weaker USD have been mostly been erased. Wider credit spreads and weaker commodities have yet to retrace all of last week’s losses.

While we seem to always be just a tweet away from another spike in volatility, looking towards September we provide the following risk guide of significant events for the market.

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