Global equity markets declined for the second week in a row, as the S&P 500 (a proxy for large-cap US stocks) lost 0.5% and the MSCI ACWI (a proxy for global stocks) dropped 1.0%[1]. Emerging markets stocks continued to lag developed market peers (the MSCI Emerging Markets index was down 2.2 percent for the week), as concern over the delta variant and increased government regulation in China persists.
Investors’ somewhat dour mood of late has also been reflected in two closely followed sentiment reports. The American Association of Individual Investors (AAII) polls investors each week to see if they are bullish, bearish, or neutral on the stock market over the next six months. Similarly, the University of Michigan polls consumers each month to assess their confidence in the economy and their current financial situation. The number of bullish investors in the AAII report and overall consumer sentiment in the University of Michigan report have both fallen significantly over the past few months (see below).
The University of Michigan reported that references to high prices and inflation were common concerns in their most recent survey[2]. Time will tell if the inflationary pressure consumers are feeling proves transitory, as the US Federal Reserve has suggested, or more long-lasting in nature.
Prices & Interest Rates
| Representative Index | Current | Year-End 2020 |
|---|---|---|
| Crude Oil (US WTI) | $71.82 | $48.52 |
| Gold | $1,752 | $1,893 |
| US Dollar | 93.25 | 89.94 |
| 2 Year Treasury | 0.23% | 0.13% |
| 10 Year Treasury | 1.37% | 0.93% |
| 30 Year Treasury | 1.91% | 1.65% |
| Source: Morningstar, YCharts, and US Treasury as of September 18, 2021 |
Asset Class Returns
| Category | Representative Index | YTD 2021 | Full Year 2020 |
|---|---|---|---|
| Global Equity | MSCI All-Country World | 14.2% | 16.3% |
| Global Equity | MSCI All-Country World ESG Leaders | 15.6% | 16.0% |
| US Large Cap Equity | S&P 500 | 19.3% | 18.4% |
| US Large Cap Equity | Dow Jones Industrial Average | 14.6% | 9.7% |
| US Small Cap Equity | Russell 2000 | 14.0% | 20.0% |
| Foreign Developed Equity | MSCI EAFE | 11.3% | 7.8% |
| Emerging Market Equity | MSCI Emerging Markets | 0.7% | 18.3% |
| US Fixed Income | Bloomberg Barclays Municipal Bond | 1.5% | 5.2% |
| US Fixed Income | Bloomberg Barclays US Agg Bond | -0.8% | 7.5% |
| Global Fixed Income | Bloomberg Barclays Global Agg. Bond | -2.8% | 9.2% |
| Source: YCharts as of September 18, 2021 |
[1] Source: YCharts
[2] Surveys of Consumers (umich.edu)