Market Perspectives (January 2012)

by Jim Baird on January 17, 2012

Executive Summary

  • Equity returns were mixed in the final month of the year. Domestic equity returns were relatively flat but sufficient to cap a strong fourth quarter on a positive note. International stocks lost ground for U.S.-based investors in December, adding to double-digit losses for the year.
  • High-quality bonds finished the year in strong fashion, rallying in December as long-term Treasury yields fell. The Fed maintained its accommodative stance during its December meeting, continuing its bond purchases under “Operation Twist.”
  • The economy grew at a moderate pace in the third quarter, but the rate of growth was again revised lower in December. The fourth quarter appears to have potentially been the strongest quarter last year. Headline inflation continued to slow, while core indicators once again ticked upward in November.
  • The employment situation appears to have gained some momentum as the economy continues to add jobs at a moderate pace. The unemployment rate ended the year at 8.5%.

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