Despite a big bounce on Friday, risk assets had another difficult week last week. The latest Consumer Price Index year-over-year increase was released on Wednesday. While falling slightly from last month’s reading, the increase remained higher than anticipated at 8.3 percent, and investors worried that the US Federal Reserve (Fed) may need to take more drastic action than anticipated. Fortunately, US Fed Chairman Jerome Powell reassured investors late in the week that bigger hikes are not part of the plan currently.[1] The S&P 500, a proxy for US large-cap stocks, ended the week down 2.4 percent while the MSCI ACWI, a proxy for global large-cap stocks, fell 2.2 percent.[2]
It seems a lifetime ago, but cryptocurrencies, meme stocks, and Cathie Wood’s ARK funds were all the rage at the midway point of last year. The inflationary and risk-off environment this year has been difficult for nearly all risk assets, but it has been especially brutal for the media darlings of 2021. As you can see below, Bitcoin and Ethereum (crypto), meme stocks GameStop and AMC, and the Ark Innovation ETF have all fallen more than 50 percent in the last year.
Prices & Interest Rates
| Representative Index | Current | Year-End 2021 |
|---|---|---|
| Crude Oil (US WTI) | $110.16 | $75.37 |
| Gold | $1,813 | $1,828 |
| US Dollar | 104.47 | 95.67 |
| 2 Year Treasury | 2.61% | 0.73% |
| 10 Year Treasury | 2.93% | 1.52% |
| 30 Year Treasury | 3.10% | 1.93% |
| Source: Morningstar, YCharts, and US Treasury as of May 14, 2022 |
Asset Class Returns
| Category | Representative Index | YTD 2022 | Full Year 2021 |
|---|---|---|---|
| Global Equity | MSCI All-Country World | -16.1% | 18.5% |
| Global Equity | MSCI All-Country World ESG Leaders | -17.1% | 20.8% |
| US Large Cap Equity | S&P 500 | -15.1% | 28.7% |
| US Large Cap Equity | Dow Jones Industrial Average | -10.8% | 21.0% |
| US Small Cap Equity | Russell 2000 | -19.8% | 14.8% |
| Foreign Developed Equity | MSCI EAFE | -15.7% | 11.3% |
| Emerging Market Equity | MSCI Emerging Markets | -18.0% | -2.5% |
| US Fixed Income | Bloomberg Barclays Municipal Bond | -10.2% | 1.5% |
| US Fixed Income | Bloomberg Barclays US Agg Bond | -9.7% | -1.5% |
| Global Fixed Income | Bloomberg Barclays Global Agg. Bond | -12.2% | -4.7% |
| Source: YCharts as of May 14, 2022 |
[1] Source: Stock Market Today: Dow, S&P Live Updates for May. 13, 2022 – Bloomberg
[2] Source: YCharts
[2] Source: YCharts