The situation in Ukraine continued to take center stage last week, crowding out most other financial news. US President Joe Biden, citing US intelligence agency information, stated that he believes Russia will attack Ukraine in the coming days.[1] Risk assets, in general, fell throughout the week as the situation deteriorated. The S&P 500, a proxy for large-cap US stocks, dropped 1.5% for the week while the MSCI ACWI index (a proxy for global large-cap stocks) fell 1,7%.[2]
The combination of geopolitical stress, along with concerns over inflation and the potential for rising interest rates, has taken its toll on US investor psyche so far this year. Two measures, one by the American Association of Individual Investors (AAII, green line below) and another from the University of Michigan (blue line), illustrate the impact. In both cases, investor sentiment has plummeted recently. The most recent AAII Bullish Sentiment is the lowest reading since 2016, while the University of Michigan Index of Consumer Sentiment is the lowest it has been since 2011.[3][4]
Prices & Interest Rates
| Representative Index | Current | Year-End 2021 |
|---|---|---|
| Crude Oil (US WTI) | $90.52 | $75.37 |
| Gold | $1,899 | $1,828 |
| US Dollar | 96.11 | 95.67 |
| 2 Year Treasury | 1.47% | 0.73% |
| 10 Year Treasury | 1.92% | 1.52% |
| 30 Year Treasury | 2.24% | 1.93% |
| Source: Morningstar, YCharts, and US Treasury as of February 19, 2022 |
Asset Class Returns
| Category | Representative Index | YTD 2022 | Full Year 2021 |
|---|---|---|---|
| Global Equity | MSCI All-Country World | -6.7% | 18.5% |
| Global Equity | MSCI All-Country World ESG Leaders | -7.5% | 20.8% |
| US Large Cap Equity | S&P 500 | -8.6% | 28.7% |
| US Large Cap Equity | Dow Jones Industrial Average | -6.0% | 21.0% |
| US Small Cap Equity | Russell 2000 | -10.4% | 14.8% |
| Foreign Developed Equity | MSCI EAFE | -4.2% | 11.3% |
| Emerging Market Equity | MSCI Emerging Markets | 0.1% | -2.5% |
| US Fixed Income | Bloomberg Barclays Municipal Bond | -3.3% | 1.5% |
| US Fixed Income | Bloomberg Barclays US Agg Bond | -3.7% | -1.5% |
| Global Fixed Income | Bloomberg Barclays Global Agg. Bond | -3.0% | -4.7% |
| Source: YCharts as of February 19, 2022 |
[1] Source: Ukraine: Biden Says He’s Convinced Russia Has Decided to Invade – Bloomberg
[2] Source: YCharts
[3] Source: AAII Investor Sentiment Survey | AAII
[4] Source: YCharts
[2] Source: YCharts
[3] Source: AAII Investor Sentiment Survey | AAII
[4] Source: YCharts