Investment Review - October 2021

1. U.S. stocks retreated in September. The S&P 500 declined -4.7%, the Nasdaq fell -5.3%, and the Dow Jones Industrial average dropped -4.2%. Investor concerns included the perception of stretched valuations, inflation, rising interest rates, and political uncertainty.
   

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2. The ten-year treasury yield climbed to 1.54% from 1.30% at the end of August. The anticipated start of Fed tapering and inflation worries led bond buyers to demand higher yields.

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   China’s second largest property developer, Evergrande, is facing a liquidity crisis. The firm has over $300 billion of debt, and was unable to make scheduled interest payments on September 23^rd and 29^th. Evergrande’s troubles may indicate a slowdown in China’s real estate market, which could present systemic risks to the nation’s economy. Bloomberg reports that real estate and related industries make up 30% of China’s GDP, and that urban Chinese residents have over 70% of their net worth in property.

   

Sources: Bloomberg LLC, FactSet, U.S. Commerce Department, Bloomberg Businessweek, IHS iSuppli

Disclosure: This commentary reflects the opinions of Welch & Forbes based on information that we believe to be reliable. It is intended for informational purposes only, and not to suggest any specific performance or results, nor should it be considered investment, financial, tax or other professional advice. It is not an offer or solicitation.

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