Economic Review


Quarterly Economic Review

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Economic Review


Quarterly Economic Review

as of SEPTEMBER 2021

Market Review

  • US equities eked out a 0.6% gain for the third quarter driven by a select handful of large technology companies. Despite the pause, it maintains a strong lead of 15.9% for the year. After setting new records in the summer, US equities finally took a breather and saw a correction of -5.0% for the first time since November 2020. The selloff was caused by fears of a contagion from potential default of Chinese real estate developer Evergrande, rising inflation pressures, uncertainties about the US government’s debt ceiling and potential for government shutdown.

  • International markets once again trailed US equity markets for both the quarter and the year. Emerging markets sold off sharply and fell 8.0% for the quarter and is now negative -1.0% for the year. The selloff was led by fears of regulatory crackdowns in China in the name of promoting “common prosperity” and the potential default of highly levered property developer Evergrande. Developed international equity markets, on the other hand, were mixed in Q3. For example, Japan outperformed the US, as it made rapid gains in its vaccination rate, while broad European markets performed in line with the US in their local currencies, but had negative US dollar returns. 

  • Within the US sector, performance was varied with results ranging from 2.7% for Financials to -4.2% for Industrials. Industrials, Materials, and Energy, some of the most economically cyclical US sectors, underperformed as economic growth slowed and supply chain constraints continued to limit some production. Sectors with a mix of cyclical and secular growth tailwinds generally outperformed, including Information Technology, Financials, and Health Care sectors.

  • Concerns of the COVID Delta variant slowing economic growth caused economically sensitive value stocks to once again underperform growth stocks. It also was the second straight quarter in which large caps outperformed small caps.  Large growth outperformed small value by nearly 6.0% during the quarter. However, small value still maintains the lead for the year up 25.3%.

  • In US fixed income markets, 10-year Treasury rates declined early in the quarter, as concerns escalated over the Delta variant’s potential economic impact. However, interest rates retraced earlier declines in the back half of the quarter as the Federal Reserve signaled it is ready to taper bond purchases. US bonds were flat and gained 0.1% during the quarter, but were unable to reverse the losses from prior quarter and remains negative (-1.6%) for the year. High-yield bonds gained 0.9% for the quarter and 4.5% for the year and continue to outpace government and corporate bonds.

  • Commodities surged 6.6% in the second quarter and remains up 29.1% for the year driven by inflation concerns and supply chain disruptions.  US REITs were flat for the quarter, but still maintain a healthy return of 21.6% for the year.


    [i] https://www.marketwatch.com/story/sp-500-books-34th-record-of-2021-as-dow-closes-up-over-200-points-nears-may-7-record-high-2021-06-30

    [ii] https://fred.stlouisfed.org/series/VIXCLS

    [iii] https://am.jpmorgan.com/ch/en/asset-management/adv/insights/market-insights/monthly-market-review/

    [iv] https://www.macrotrends.net/2480/brent-crude-oil-prices-10-year-daily-chart

    [v] https://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/TextView.aspx?data=yieldYear&year=2021  

Gracio Garcia is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS) 160 Gould Street, Suite 310, Needham, MA 02494, (781) 449-4402. Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor. Field Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is a wholly-owned subsidiary of Guardian. The Bulfinch Group is not an affiliate or subsidiary of PAS or Guardian. Life insurance offered through The Bulfinch Group Insurance Agency, LLC, an affiliate of The Bulfinch Group, LLC. The Bulfinch Group, LLC is not licensed to sell insurance. The Bulfinch Group is not registered in any state or with the U.S. Securities and Exchange Commission as a Registered Investment Advisor. CA Insurance License #0K24081; FL Insurance License #P179788. PAS is a member FINRA, SIPC. 2021-119570 Exp 4/23