Asset Class Returns - 01/31/2020

Kirk Kreikemeier |

A rough end for the first month of the year – unless you were in long maturity treasury bonds.

2020 started out where 2019 left off – a steady climb higher for the first 20 days of January.  But by the end of the month, negative returns were seen for most equity asset classes on the back of slowdown in global growth due to the Coronavirus.  During this ‘risk-off’ stage, demand for treasuries were high with rates dropping from 0.30% - 0.40%.  The 10-year yield touched 1.50% again.
Looking a layer deeper in the asset classes:

  • US small cap stocks underperformed large caps
  • Emerging markets fell more than international developed markets
  • Energy got hit hard on global growth concerns, bringing commodities down
  • Investment grade credit returns rose on falling rates but high yield returns were flat as low-quality credit spreads widened
  • Energy sector was worst performer while safe utilities (at least with falling rates) was the highest; technology also remains strong

On the economy:

  • The FOMC meeting concluded January 29th keeping rates unchanged and emphasizing the desire to push inflation higher in the press conference
  • Inflation (as measured by CPI) continued to drift higher though core inflation decreased slightly
  • First look at 4th Quarter GDP came in at 2.1% (real, not nominal) slightly higher than expected

Posted by Kirk, a fee-only financial advisor who looks at your complete financial picture through the lens of a multi-disciplined, credentialed professional.