Eager to close the door on 2020
Weekly Bond Commentary
A week light on economic data and general market fatigue contributed to some profit-taking and a softer tone in the markets.
The S&P 500 hit another record high before rolling over, and the 10-year U.S. Treasury note yield neared its highest level since March before retreating. Optimism on vaccinations waned a bit, as reports of too few doses being available and vaccinations taking longer to reach the bulk of the population seemed to weigh on sentiment.
After a long, hard year, it’s easy to see how market participants are eager to put this one behind them. Markets climbed a wall of worries in 2020, helped by Federal Reserve policies and fiscal stimulus. Equities have posted strong returns, and with the sharp drop in yields, bond returns have been surprisingly good.
But as 2021 approaches, virus cases have increased, not decreased. The prospects of getting back to some sense of normalcy, while always in the future, seem elusive in the near term. Few predicted when the shutdowns started in March that another March would come without getting back to normal. The holiday season is an especially important time for friends and families to gather and this year is no different, but everyone needs to be more careful in how we do it.