There is always some degree of prevailing market volatility, but during periods of market stress, volatility often spikes across all asset classes. The chart on the left shows the spike in equity, interest rate, and foreign exchange volatility at the onset of the pandemic, measured by a weekly z-score or deviation from historical conditions. On the right, we show hedge fund returns less short-term rates. With rates at near-zero for the last decade or so, the boost in hedge fund returns from rates has been near-zero. However, with rates now moving higher, returns should receive a boost to returns from their collateral and cash holdings.