Zooming out in volatile markets: Insights from Jurrien Timmer - April 13, 2026

Using volatility as a moment to rebalance

Jurrien suggested to use periods of market stress to rebalance rather than withdraw. When prices move sharply, assets that remain attractive may become cheaper for reasons that may not reflect long‑term fundamentals. In these situations, portfolios can be adjusted by adding to areas that have sold off and trimming those that have held up. He described this approach as providing liquidity rather than reacting after prices have already adjusted. While this discipline is not always comfortable during volatile periods, it reflects how long‑term investment processes are often applied in practice.

When traditional diversification falls short

One challenge for investors today is that assets traditionally relied on for diversification do not always behave independently. Jurrien noted that long‑term government bonds have, at times, become positively correlated with equities. When both move in the same direction, the stabilizing role of a balanced portfolio can be reduced. Investment‑grade bonds and inflation‑protected securities have also experienced periods of elevated correlation. As a result, more attention has shifted toward assets that have tended to behave differently during recent bouts of market stress. He pointed to gold, certain commodities and some liquid alternative strategies as examples. In recent months, broad commodity exposure has generated returns while becoming less correlated overtime. Managed futures strategies have also responded to emerging trends, though their effectiveness can vary depending on the market environment.

Looking beneath the surface of recent equity moves

Despite heightened headlines, the overall equity drawdown has been relatively modest. At its low, the market was down just under 10 percent from its peak, a move Jurrien characterized as fairly typical rather than extreme. What may be less visible, however, is what happened beneath the surface. While prices declined, corporate earnings continued to grow. As a result, valuations declined more sharply than price levels alone would suggest. Jurrien noted that price‑to‑earnings multiples fell by close to 20 percent at the low. In his view, changes in valuation offer a clearer signal of investor sentiment than price movements on their own. Valuation reflects how much investors are willing to pay for future earnings, even when headline index levels appear resilient.

Interest rates and shifting market relationships

Interest rates continue to influence how asset classes interact. Yields on U.S. Treasury bonds have remained in a relatively tight range, with higher rates making risk‑free returns more competitive with equities than in recent years. When cash‑like yields rise, equities often need to reprice to remain attractive relative to risk‑free alternatives. This dynamic can contribute to higher correlation between bonds and stocks, particularly in an environment where government funding needs are elevated. He described this backdrop as one of fiscal dominance, where funding considerations play a larger role in market behaviour. In that context, traditional relationships between asset classes may not hold as consistently.

Gold, Bitcoin, and evolving signals

Jurrien also pointed to unusual behaviour among assets that are often considered safe havens. During recent geopolitical stress, gold and Treasury bonds have at times moved together, which is not typical. One possible explanation he noted is that reserve assets may increasingly be used as sources of liquidity rather than serving solely as defensive holdings. This remains a theory rather than a settled conclusion. At the same time, Bitcoin has shown relatively stable behaviour during recent market stress. Several narratives are being tested in real time, including how alternative payment systems and reserve assets may be used as global trade patterns evolve. These observations remain exploratory, highlighting how long‑standing assumptions are being challenged.

Earnings momentum as an ongoing support

Through this period, corporate earnings have continued to play an important stabilizing role. Expectations for earnings growth have remained strong and have not followed the typical pattern of declining ahead of reporting season. Jurrien noted that earnings in recent quarters have exceeded expectations by a wider margin than usual. While this does not eliminate the potential for volatility, earnings momentum has remained an important support for equity markets as valuations adjust.

Conclusion: Staying grounded in uncertain markets