Market Commentary — December 20, 2021

Fed tightening and omicron spike fears made for a volatile week last week. With expectations for higher interest rates, growth and tech stocks fared the worst. The NASDAQ Composite ended 7% below its recent peak, but still above the 10% correction territory threshold.

Adding to the week’s volatility was “triple witching” when stock options, stock index options, and stock index futures expire simultaneously.

PPI jumped to 9.6% in November on a year-over-year basis, the biggest increase since data was first collected in 2010. The inflationary data heightened speculation that the Fed would signal more rate hikes in 2022, with the market now pricing in 3 quarter-point increases instead of 2. The Fed also announced it was accelerating its tapering of monthly asset purchases.

Despite the prospect of Fed action, omicron pushed bond yields lower, with the 1-year dipping below 1.4% for the first time in nearly two weeks.

In ETF news, the SEC delayed decisions on the Bitwise and Grayscale spot Bitcoin ETF filings. While equity ETFs logged in another $15.9 billion in weekly inflows, marking its 11th straight week of inflows, fixed-income funds saw $885 million in net outflows. Here it is the middle of December, and new money flows into US ETFs stand at over $804 billion, $300 billion above 2020’s record mark.

$1 trillion in flows for 2022? That is quite a possibility. One thing is for sure, the sun has set on the mutual fund era.

Merry Christmas to those that celebrate.

“Glory to God in the highest, and on earth peace, goodwill toward men,” Luke 2:14.

Jane Edmondson
CEO and Co-Founder

About

EQM Indexes LLC is a woman-owned firm dedicated to creating and supporting innovative indexes that track growth industries and emerging investment themes. Co-founded by Jane Edmondson, a former Institutional Portfolio Manager with more than 25 years in the investment industry.

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