Overview of the Second Quarter of 2023

The second quarter of 2023 saw various themes and developments in the market. The SVB debacle, which led to a deposit flight and increased volatility in short-dated rates, highlighted the risks of rising interest rates. However, despite concerns about higher rates, equities have shown resilience, with tech and consumer discretionary sectors performing particularly well. The VIX remained stable, and the stock-bond correlation showed signs of returning to more traditional negative levels. Realized volatility in the S&P was low, and option pricing reflected a lower demand for insurance. Diversification remained important as different sectors delivered significant return dispersions.