Anna Rathbun, Chief Investment Officer

Asvaccination numbers continued to advance in the United States and restrictionson activity widely lifted across the country, the economic data did notdisappoint. We saw growth in GDP for the first quarter of 2021, with personalconsumption driving the gain. Certainly, the distribution of additional aid tohouseholds as a part of The American Rescue Plan Act did not hurt, as personalincome also surged in March. This growth indicates that the economy is heatingup, although we know this is happening under extraordinarily unusualcircumstances. Prices are higher because of supply chain disruptions andresulting shortages; GDP gains have outpaced recent history due to thereopening effect and unprecedented fiscal aid. But for the month of April, goodeconomic news set the stage for a supportive market environment, no matter thedriving forces behind them.


  • Stocks continuedto march higher during April and the rates market stabilized.
  • COVID-19 cases continued to escalate in various parts of the world, particularly in India, and the markets ended the month with a little hesitation in the upward momentum. 
  • Earnings season for the companies in the S&P 500 Index has not disappointed, however the markets have not rewarded these companies proportionately in terms of price reaction and it remains to be seen the near-term direction for equity markets. 
  • Interest rate volatility took a pause in April, and the U.S. dollar fell to add currency gains for international equity. 
  • The developed markets, represented by the MSCI EAFE Index, was weighed down by negative performance of Japan, but the European countries rallied to keep the index in positive territory. 
  • Emerging market equities were mixed. Meanwhile, India posted muted returns as its struggle with the pandemic escalated and made global headlines. 
  • Rates took a breather during April, with the 10-year yield falling by the end of the month. Falling rates were generally good for fixed income investments with longer duration profiles, and the Bloomberg Barclays Investment Grade Corporate Index and the Aggregate Index made a comeback.
  • High yield corporate index also posted comparable returns despite its lower duration profile, aided by compressing corporate spreads and higher coupon return. 
  • The Federal Reserve held ground at the April meeting, keeping policy unchanged and its attitude toward inflation and the employment situation consistent with past communications. The Fed noted the improvement in economic conditions, but it still believes that some time is needed to gain momentum. 
  • Dallas Fed President Kaplan made a comment that was in direct conflict with the communication from Chairman Powell two days earlier; in response equity markets fell and the benchmark 10-year yield rose. 

Looking Ahead

Since last month, another ambitious proposal from the WhiteHouse made its way into the public discourse: The American Families Plan. Thisspending plan is to be funded by more tax hikes, and on the spotlight is thecapital gains tax for certain bracket of American individuals. This, coupledwith the potential corporate tax increases to fund the infrastructure plan arestill in nascent stages, but will be topics of discussion for the markets inthe coming weeks. Globally speaking, another tug-of-war between COVID-19infections and economic growth is rearing its head. This time, it is derivedfrom the differences in vaccination progress in various parts of the world.Vaccination feels like a triumph here in the United States, but as we makeprogress in inoculating our public, other countries are experiencing additionalwaves of infections. It will be difficult to resolve the global supply chainissues that we are hearing about from corporations as long as COVID-19 is stillraging in various parts of the world. Simply put, we need to heal together.

More Information

For more information on the April financial market activity, please contact CBIZ Investment Advisory Services.

The information included in this update is provided for informational purposes only and should not be construed as investment advice. The views expressed are those of the author based on the data available when this update was written and are subject to change based on market conditions or other factors. CBIZ Investment Advisory Services and/or CBIZ Retirement Plan Services disclaims any liability for any direct or incidental loss incurred by applying information supplied in this update.

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Published on May 03, 2021