Anna Rathbun, Chief Investment Officer

After the second year with COVID-19, some areas of our lives seem to have improved, some unchanged. Having gone through two dominant variants, delta and omicron, COVID-19 continues to propagate itself through the global population. But we have new therapeutics to combat the infection, and vaccinations have made headway around the globe. Even the tightly wound global supply chain showed easing with the ports of Los Angeles and Long Beach reporting a meaningful drop in the volume of idle cargo on their docks. Regional Fed surveys and the Institute for Supply Management surveys have also indicated shortening delivery times and falling trends on both prices paid and received. As we start 2022, we still do not know how omicron will ultimately affect mobility on the whole; recommendations from the Center for Disease Control and other institutional responses seem to be adapting to new information as we learn more about the new variant. Perhaps more importantly, the public perception of the new variant has diverged across the country, wary with COVID-19 fatigue. In this context, U.S. markets still managed to post double-digit returns for 2021, perhaps a little on the defensive side to round out the year.


The S&P 500 Index ended 2021 having reached a 70th record high, returning 4.5% for the month of December and a 28.7% gain for the year.

Amid the uncertainties rising from the new omicron variant to conflicting policy directions from global central banks, December revealed a market that is desperately looking for some clarity.

International markets benefited overall from a slightly weaker US dollar, with the currency having traded mostly sideways during the month.

Developed market equities provided strong returns despite some policy restrictions on mobility as a response to the omicron variant.

This month in the fixed income markets, the U.S. Treasury yield curve shifted up, posing a headwind for fixed income investments with higher duration profiles.

Despite the upward movement of the yield curve, the 10-year Treasury yield finished the year at 1.5%, and the 30-year yield below 2%, contrary to what the markets anticipated during the first quarter 2021 when we realized how effective the vaccines were at preventing hospitalizations.

Looking Ahead

The year 2021 has been an interesting journey of various ups and downs. There was the optimism for reopening when the vaccines first showed their potency, then the disappointment of ending the year with COVID-19 still very much a part of our lives. And while we anticipated prices to exhibit inflationary characteristics, the headline figures have been eye-popping, way beyond consensus expectations. Heading into the new year, there are reasons to be cautious: omicron could slow down our journey to normalcy; policy uncertainties exist both fiscal and monetary; and distant but brewing geopolitical tensions may pose a risk for investors in 2022. There are also reasons to be excited with an improving global supply chain, continued innovation on COVID-19 therapeutics, and the human tendency to drive better outcomes. After three years of stellar equity market returns, we are managing our expectations for market returns in 2022, but perhaps with a splash of optimism. Happy New Year, everyone.

More Information

For more information on the December 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 disclaims any liability for any direct or incidental loss incurred by applying information supplied in this update.

Investment advisory services provided through CBIZ Investment Advisory Services, LLC, a registered investment adviser and a wholly owned subsidiary of CBIZ, Inc.

Published on January 04, 2022