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Q4 2021

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Dec 2021 | Selecting an OCIO


Oct 2021 | Q3 Takeaways

Oct 2021 | Diversification

Jul 2021 | Q2 Takeaways


Jun 2021 | Viewpoint

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Key Takeaways, Fourth Quarter 2021

By Ralph Goldsticker, CFA | Jan 2022

The market’s behavior suggests that the pandemic’s economic risks and high inflation will be contained. During the quarter, stocks rose and bond values changed little. Treasury interest rates and TIPS break-even inflation rates saw little change. Real interest rates remain significantly negative. While the Federal Reserve and other central banks remained accommodative; their tone is increasingly hawkish. QE is slowing and will end by the middle of 2022. Interest rates tended to rise at the end of the quarter, reflecting the Fed’s new stance. Economic growth is expected to slow but remain above its longer-term trend.



Stocks rose despite the Omicron variant’s appearance, increased concerns about inflation, and central banks’ potential tightening.

  • Led by a few mega-cap tech and tech-adjacent stocks, the broad US stock market rose 9.3% and is up 25.7% YTD.

  • US growth stocks outperformed value, returning 11.6% versus 7.8%. That put growth ahead for the year, 27.6% versus 25.2%.

  • Large caps outperformed small caps 11.0% vs. 2.1%. YTD results were 28.7% vs 14.8%.

  • International stocks continued to lag the US. Developed market stocks gained 2.7%, and emerging lost 1.3%

Fixed Income

Bond returns were mixed for the quarter.

  • The US investment grade bond market was flat over the quarter but is down -1.5% YTD.

  • Interest rates on short-to-intermediate maturity Treasuries rose. The 2-year rate rose 46 bps and the 5-year rose 30 bps.

  • Rates on longer-term bonds were flat to down. The 10-year Treasury rate rose 2 bps, while the 30-year fell 14 bps.

  • Investment Grade bond spreads widened by 7 bps. High Yield narrowed by 6 bps, They are 77 bps narrower than their December 2019 level.

  • Real interest rates continue to be negative: -1.66% for 5-year TIPS, and -1.10% for 10-year TIPS.

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