May 2020 Financial Market Memo
Global financial markets continued their march upward in May. And, although global economic activity remained depressed, investors appeared to be looking past the negative data from April. Instead, investors have been focused on headlines praising COVID-19 vaccine trials in the U.S., optimism surrounding future growth as a result of countries easing activity restrictions, pent-up consumer demand, and further reassurance from Chairman Powell that the Fed still has the firepower to support the economy. With that said, some volatility remained prevalent in the markets. In spite of some volatility, markets posted gains across the board:
- U.S. markets (VTI) climbed 5.40% during the month.
- Developed international markets (VEA) led the way, up 5.58% in May.
- Emerging market equities (VWO) returned a healthy gain of 3.29%.
- Bond markets (BND) ended the month near flat at 0.67%.
- Intermediate-term Treasury yields appeared stuck for the month with the 10-year yield remaining between a floor of 0.62% and a ceiling of 0.72%.
- On the other hand, we witnessed an overwhelming (and yet not surprising) demand for longer-term treasuries.
- Last month, the U.S. Treasury auctioned off new 20-year bonds for the first time since the 1980’s and public bids for the bonds came in at $50 billion which nearly tripled the $20 billion of issuance.
Despite an onslaught of negative news, markets continue to advance. We question the sustainability of this. However, we question our ability to outsmart the markets even more! Which is all the more reason to remain disciplined with your investment strategy over the long-term, and focus on the things you can control.
Major Market Index Returns
Period Ending 5/31/2020 (Annualized)
Selections include ETFs generally available to consumers. Returns are net of management fees but do not include trading and Advisory fees. Return source: Morningstar. AP disclosure.
Sample Portfolio Mix Returns (Annualized)
Global portfolio mixes are Stocks/Bonds and are represented by VT/BND; returns are annualized. Vanguard funds are net of all management fees but do not include trading and Advisory fees. Return source: Morningstar. AP disclosure.
What You Pay For: The Percentage of Active Managers That Underperform Their Benchmarks
Trailing 10 Years Numbers As of December 31, 2019 — S&P SPIVA Scorecard