CIO NOTEPAD: A Quick Look at Evergrande
September 23, 2021
Commentary – Fourth Quarter 2021
February 25, 2022CIO NOTEPAD: A Quick Look at Evergrande
September 23, 2021Commentary – Fourth Quarter 2021
February 25, 2022INSIGHTS
Commentary - Third Quarter 2021
The quarter can be summarized by continued premium valuations in equity markets, a sideways trading fixed income market, and increased interest rate volatility. These descriptors remain accurate as we move into the fourth quarter.
Fundamentals have been largely ignored in favor of buying and selling news events contributing to significant noise in short-term performance. However, for long-term investors, we believe this presents opportunities to deploy sideline cash in a methodical manner as more attractive entry points must eventually present themselves.
The third quarter was wrought with exogenous variables impacting the financial markets and investor behavior. The overarching themes continue to be COVID-19 resurgence, accelerating inflation, labor force participation rate, the potential removal of monetary stimulus by the Fed, and most recently, the Congressional debt ceiling debate. While many have become accustomed to seeing these variables in the headlines, the financial markets struggle to find a firm footing against the backdrop of such lingering uncertainty.
From an asset class perspective it was a tale of positive correlations as both equities and fixed income delivered lackluster performance. U.S and international developed market equities started strong, only to stall, and give up most of the gains to end the quarter. Fixed Income, a traditional safe haven during equity market volatility, delivered bumpy results in the face of economic instability domestically and across the globe. However, despite these less than stellar results, U.S. fixed income did outperform its equity counterparts by ending in positive territory. The top performing sector across both equity and fixed income were inflation-linked and corporate bond strategies while the worst performing sector was emerging market equities.
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Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal the performance noted in this publication.
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