Given the recent sharp decline in global equity markets, Frontier’s Capital Markets and Asset Allocation Team (CMAAT) has put together a short note. Our current analysis suggests global economic and financial environment remains solid. An increase in US 10 year bond yields, expectation of accelerating US wage growth/inflation and tightening US monetary policy are potential causes for the sell down, which is similar to the February selloff. A market sell down of the magnitude of -10% is not uncommon, particularly after periods of strong performance (S&P 500 returned nearly 15% from March to September 2018), in fact it is the average drawdown in a year. Our current view is that the market sell down is more technical in nature than fundamentally driven.
