Milliman FRM Market Commentary: June 2018

Global equity segments sharply diverged heading into second half. In this month’s commentary, Milliman’s Joe Becker addresses the following:

• The S&P 500 notched its third positive monthly return, locking in a solid Q2 gain of 3.4%. Relative to last year, however, its year-to-date (YTD) return of 2.6% is less than one-third of what it was through this time in 2017 (9.3%).
• Meanwhile, small cap stocks, deemed to have less exposure to the detrimental effects of trade wars, are up 9.4% YTD, their best first-half return of the last five years.
• The same cannot be said for emerging market stocks, which were down more than 7% in Q2 and are down nearly 15% from their all-time high in January. Among the worst performers have been China and Brazil, down 13% and 18% YTD, respectively, in USD terms.
• Notwithstanding back-and-forth trade war rhetoric, U.S. equity market volatility trended lower as the month wore on; June’s volatility was lower than May’s and was also below its five-year average.
• The correlation of the S&P 500 to global ex-U.S. equities declined during the month while its correlation to the U.S. aggregate bond market remained largely unchanged.

To learn more, download the full commentary at