After a tumultuous start to August, it makes sense to catch our breath and look at what happened and what, if anything, has changed.

It has been our view for quite some time that the US equity market has been priced for a near perfect outcome. As we’ve continued to make new all-time highs through the year, we’ve been cautiously flagging risks ranging from a slowing economy to potential volatility brought on by the election cycle in the US and geopolitics abroad. Yet as is often times the case, it was a culmination of events, including one that was much further down on many investors’ list of worries, that triggered a significant spike in volatility in markets.

Early August saw the release of several data points that suddenly spooked investors. While soft-landing has been the market’s base case for quite some time now, Institute of Supply Management (ISM) data, initial claims, and unemployment triggered serious concern about the pace at which the US economy was slowing. This, in turn, fueled concerns about whether or not the Federal Reserve was in the middle of making a policy mistake in waiting too long to cut and even led some to start calling for intra-meeting action.

The result was a continuation of the rapid decline in Treasury yields that had already been in place since early July. Rates fell precipitously through the end of the first week in August and into the next, with the yield curve steeping dramatically and the 10 minus 2 briefly uninverting. Equity markets followed yields lower.

As we’ve said before, too, context matters. The aggressive move in US sovereign rates followed a monetary policy meeting from the Bank of Japan in which they increased their policy rate to 0.25%, ultimately surprising markets. The resultant compression in spreads propelled the currency higher and sent the Nikkei to it’s worst day since 1987, falling by 12%, only to rebound nearly 10% the following day. A whole lot of people learned about the yen carry trade that week.

Despite the initial feeling of panic that gripped markets, equities and yields found a floor and have since rebounded, supported by better than anticipated initial claims from the US. With stocks having reclaimed much of what was given back, many are left wondering where we go from here, and what has changed.

So what is our answer as it pertains to the latter? In our view, not much.

We have been in a period of relatively low volatility and equity markets that have generally trended higher. Despite the relative calm, we have continued to point to risks that we see under the surface, and the situation is no different now. There can be little question that the US economy is slowing. We can debate whether what we’re seeing is softening versus outright weakness, but the trend lower is clear. How this ultimately impacts corporate fundamentals remains to be seen, and will play a significant role in determining where equity markets head from here. It’s also the case that what looked like a sure Republican win has suddenly become a much closer race, and the market will have to deal with political uncertainty as various scenarios are considered by investors. And this is to say nothing of the myriad risks abroad.

In such an environment, we continue to remain focused on managing risk while also deploying our time-tested investment strategies to uncover new opportunities. In what we believe may well be a more volatile market environment, we believe investors are well suited by an active approach to investing.

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This material contains the opinions of Manning & Napier Advisors, LLC, which are subject to change based on evolving market and economic conditions. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.