Market Notebook

Global equities struggled last week while bonds generally remained range-bound. A new Covid variant nicknamed Omnicron appeared to cause market participants to “sell now and ask questions later” as little is known about the variant. The general flight to safety punished junk bonds and provided a little pop to longer duration bonds. From a longer-term perspective, little has changed. According to the Conference Board’s Leading Economic Index commentary regarding October’s data, growth in the fourth quarter is expected to remain strong and then slow into the first quarter of 2022. The presence of Omnicron, does not appear to change the outlook.

It seems prudent to expect prices to adjust to real economic conditions, i.e., slowing growth and persistent inflation. If this scenario is true, one might expect both equities and bonds to struggle.

It is important to remember that pullbacks in markets are normal and expected behavior, and such pullbacks can provide opportunities for entry into great long-term investments.

All the best in the week ahead!