Spring 2021 Investment Report
The market continued to show strength during the first quarter of 2021, as the S&P 500 Index gained 6.2%. The market’s performance was notable for the continuation of trends that emerged in the latter portion of 2020, primarily due to investors anticipating a robust economic resurgence. Bond investors also priced in the economic rebound as yields on longer maturity securities moved significantly higher. Specifically, the yield on the 10-year US Treasury bond more than doubled in the quarter, ending at 1.74%. The Bloomberg Barclays US Aggregate Bond index, comprised of a broad range of fixed income securities, had a 3.4% negative return in the first quarter. Created in 1976, it was the worst quarterly performance since 1981's third quarter, when the Federal Reserve was in the midst of aggressively raising rates to combat high inflation.
How can we go from one of the worst economic crises in recent history to a GDP growth rate not seen since the early '80s so fast?