“Sometimes you will never know the value of a moment until it becomes a memory.” – Dr. Seuss

2020 is history. Much changed and memories were made. That could be said about any year, so what was different about 2020? Nearly everything, which is why 2020 will always stand out in our memories. A pandemic, social unrest, unprecedented global fiscal and monetary stimulus, the election, and record-breaking stock market movements to name a few.

After a volatile start to 2020, global stock markets finished strong, with the U.S. stock market gaining +18.4%, while international stocks were up +10.6% for the full year. The U.S. bond market also performed well, returning +7.5%. Much of the bond markets’ gains were due to interest rates declining (bond prices typically have an inverse relationship to interest rates). Real estate and commodities lagged on the year, returning -6% and -23.7%, respectively.

Broadly, stock market prices have been experiencing a tailwind supported by stimulus efforts and low-interest rates, coupled with election uncertainty in the rear-view mirror and vaccine optimism. Consumer spending on goods and services makes up a large part of our economy, and recent data suggests consumption could increase, especially on the services side, as we navigate out of this pandemic. Interest rates in the market remain very low, making the cost of borrowing money relatively inexpensive, which can be good for spurring economic growth. On the flip side, interest earned in savings accounts is near zero, back to levels witnessed after the previous recession. Guidance from the Federal Reserve, which controls short-term interest rates, has indicated they are not expecting to increase in 2021.

After a year like 2020, we reflect on the value of our experiences and the challenges we all endured. It can be hard to recall the good moments; certainly, they existed. Perhaps, just harder to surface during a year like 2020. We are grateful for the dedication shown globally by frontline workers. We marvel at the advancements in healthcare and technology, which are nothing short of miraculous.

For more market and economic perspectives, please tune into our live Quarterly Market Update on January 19th. Details here.

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Indices data source: yCharts, S&P 500, MSCI ACWI ex US International, Bloomberg Barclays Aggregate Bond Index, FTSE/NAREIT Composite, S&P Goldman Sachs Commodity Index