Market Outlook · November 04, 2020

Market Volatility: Referendum on Future Growth—Or Just a Correction?

Brent Ciliano

CFA | SVP, Chief Investment Officer

1 From August of this year through today, the 2/10-year spread has widened by almost 30 basis points.

Historically, the spread between 2-year and 10-year Treasury bonds has been a relatively decent indicator of both impending recessions, as well as market turmoil—contracting in times of stress, and widening during times of economic expansion.

2 European credit spreads – even in the weaker markets – are still contained and have not widened out.

European investment-grade credit spreads have been incredulously benign.

3 Emerging markets stocks are still making relative highs vs. developed international stocks.

Emerging markets relative to US stocks continue to outperform. If growth either within the US or outside was truly in jeopardy, you would most likely see a reversal of this outperformance.

This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.

Links to third-party websites may have a privacy policy different from First Citizens Bank and may provide less security than this website. First Citizens Bank and its affiliates are not responsible for the products, services and content on any third-party website.

Your investments in securities, annuities and insurance are not insured by the FDIC or any other federal government agency and may lose value. They are not a deposit or other obligation of, or guaranteed by any bank or bank affiliate and are subject to investment risks, including possible loss of the principal amount invested. Past performance does not guarantee future results.

First Citizens Wealth Management is a registered trademark of First Citizens BancShares, Inc. First Citizens Wealth Management products and services are offered by First-Citizens Bank & Trust Company, Member FDIC; First Citizens Investor Services, Inc., Member FINRA and SIPC, an SEC-registered broker-dealer and investment advisor; and First Citizens Asset Management, Inc., an SEC-registered investment advisor.

Brokerage and investment advisory services are offered through First Citizens Investor Services, Inc., Member FINRA and SIPC. First Citizens Asset Management, Inc. provides investment advisory services.

Bank deposit products are offered by First Citizens Bank, Member FDIC.