Capital Markets Review (As of 12/31/2018)
Chart of the Week for January 4, 2019 - January 10, 2019
Capital market returns were generally negative in the fourth quarter of 2018, with the exception of U.S. Bonds. U.S. High Yield Bonds, U.S. Large-Cap Stocks, U.S. Small-Cap Stocks, International Developed Market Stocks, and Emerging Market Stocks all posted negative returns. Those asset classes posted similarly negative returns for the 1-year period, with U.S. Bonds being slightly positive. For the 5- and 10-year periods, all asset classes shown posted positive returns.
For the fourth quarter of 2018, U.S. Bonds returned 1.64%, U.S. Small-Cap stocks were down -20.20%, U.S. Large-Cap Stocks were down -12.54%, International Developed Market Stocks were down -12.54%, Emerging Market Stocks were down -7.47%, and U.S. High Yield Bonds were down -4.53%. While U.S. economic reports were generally positive, other factors including increasing U.S. short-term interest rates, a drop in the price of oil, and concerns about global trade and tariffs all contributed to the negative capital markets returns in the fourth quarter. In spite of the rising U.S. short-term interest rates, U.S. Bond returns were helped by investors buying fixed income securities as the equity markets were experiencing negative returns. This buying increased bond prices and helped U.S. Bond returns.
In the chart above:
- U.S. Bonds are represented by the Bloomberg Barclays U.S. Aggregate Bond Index.
- U.S. High Yield Bonds are represented by the Bloomberg Barclays U.S. Corporate High Yield Index.
- U.S. Large-Cap Stocks are represented by the S&P 500 Index.
- U.S. Small-Cap Stocks are represented by the Russell 2000 Index.
- International Developed Market Stocks are represented by the MSCI EAFE (Net) Index.
- Emerging Market Stocks are represented by the MSCI Emerging Markets (Net) Index.
Posted by: Steve Carter <steveacarter@att.net>
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