Market Wrap - December 2020
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The US election had earlier dominated attention. Donald Trump’s reluctance to
concede diverted attention from possible policy changes under the new Biden administration, but this will likely become an increasing focus
for investors in the months ahead.
Credit spreads narrowed sharply, both in Australia and overseas. This reflected optimism around the vaccines and a potential return to
‘normality’ in 2020, and supported returns from corporate bonds domestically and internationally.
There was increasing discussion about the possibility of interest rate increases in key regions, to counteract gathering inflationary
pressures. This saw bond yields rise, and adversely affected the performance of fixed income markets.
In spite of the generally positive mood investors remained concerned by the ongoing spread of the Delta variant of Covid-19, and whether it could derail the recovery in major economies.
