PDF Student of the Market
[Pages:11]Student of the Market
May 2022
USRRMH0522U/S-2186297-1/11
Student of the Market
May 2022
Bond market returns
Rolling returns for U.S. bonds
Returns following bad bond returns
Fed rate hikes
Stocks market returns
Stocks market volatility
Seasonal stock and
bond returns
Inflationadjusted returns
Source: Morningstar as of 4/30/22. Past performanceis no guaranteeof future results. Index performanceis shown for illustrative purposes only. You cannot invest directly in an index.
USRRMH0522U/S-2186297-2/11
BOND MARKET RETURNS
Worst ever start to a year for bonds
2022 is on pace to be the worst year ever for bonds
Worst ever start to a year for bonds
Since 1926, total return for1/1- 4/30 each calendar year
-3.2 -3.1 -3A.6ll 12 months
were positive for the first
time ever
-2.6
-2.3
-2.2
-1.7
-1.4
-1.1
-9.5
Returns following the 10 worst starts to a year
Since 1926, returns for the next 8 and 12 months
Year 2022
First 4 months
-9.5
Next 8 months
?
Next 12 months
?
1994
-3.6
0.8
7.3
1974
-3.2
9.2
8.6
1981
-3.1
9.7
17.1
2021
-2.6
1.1
-8.5
1996
-2.3
6.1
7.1
2018
-2.2
2.3
5.3
1990
-1.7
10.9
15.2
1937
-1.4
3.0
6.7
1987
-1.1
3.9
7.3
Avg
-3.1
5.2
7.3
2022 YTD 1994 1974 1981 2021 1996 2018 1990 1937 1987
Source: Morningstar as of 4/30/22. U.S. bonds represented by theIA SBBI US Gov IT Index from 1/1/26 to 1/3/89 and the Bloomberg U.S. Agg Bond TR Index from 1/3/89 to 4/30/22. Past performance does not guarantee or indicate future results. Index performance is for illustrative purposes only. You cannot invest directly in the index.
USRRMH0522U/S-2186297-3/11
ROLLING RETURNS FOR U.S. BONDS
U.S. bonds: Percent of periods that earned a positive return
Percentage of U.S. bond rolling periods that are positive
(1/1/26 - 4/30/22)
70%
83%
90%
99% 100% 100%
Current bond returns and historical rank
(1/1/26 ? 4/30/22)
U.S. Bonds
Worst period since
Historical rank
1-month
-3.8%
Feb 1980 3rd worst (-5.9%) (out of 1156)
6-month
-9.5%
Mar 1980 3rd worst (-11.5%) (out of 1151)
1-year
-8.5%
Mar 1980 2nd worst (-9.2%) (out of 1145)
3-year
0.4%
Sept 1981 12th worst (-0.3%) (out of 1121)
4-year
1.6%
Nov 2018 111th worst (1.2%) (out of 1109)
1 month 6
1
months year
3
4
5
years years years
5-year
1.2%
Dec 1959 21st worst (1.0%) (out of 1097)
Source: Morningstar as of 4/30/22. U.S. bonds represented by theIA SBBI US Gov IT Index from 1/1/26 to 1/3/89 and the Bloomberg U.S. Agg Bond TR Index from 1/3/89 to 4/30/22. Past performance does not guarantee or indicate future results. Index performance is for illustrative purposes only. You cannot invest directly in the index.
USRRMH0522U/S-2186297-4/11
RETURNS FOLLOWING BAD BONDRETURNS
Returns following bad periods for bonds
Worst 1-year bond periods (price return only)
Since 1926, 25 worst 1-year periods (price only, ex-income)
Mar-80 Feb-80 Jul-81 Jun-81 Aug-81 Sep-81 May-81 Apr-81 Jan-80 Sep-80 Aug-80 May-84 Apr-22 Oct-94 Nov-80 Nov-94 Dec-94 Jun-84 Sep-94 Oct-79 Sep-69 Jan-95 Apr-84 Sep-87 Jan-00
Avg
Bond return (price only)
-17.3 -16.4 -15.3 -15.2 -14.2 -13.5 -13.2 A--ll11121..213 months w-e1r1e.2positive f-o1r1.t1he first -1ti0m.5e ever -10.4 -10.0 -9.6 -9.6 -9.5 -9.5 -9.5 -9.4 -9.2 -9.1 -8.7 -8.2 -8.1 -11.3
Stock total return Bond total return
1 year later
1 year later
40.1
13.1
21.6
10.5
-13.3
20.5
-11.5
13.4
3.2
29.9
9.9
35.2
-10.7
14.9
-7.4
17.1
19.5
6.0
-2.7
-2.6
5.4
-3.6
31.7
30.2
?
?
26.4
15.7
-5.4
13.4
37.0
17.6
37.6
18.5
31.0
29.9
29.8
14.1
32.1
3.4
-6.2
11.12
38.7
17.0
17.7
19.9
-12.4
13.3
-0.9
13.8
13.0
13.9
Bond price return 1 year later 1.6 -0.5 6.1 -0.3 14.3 19.2 1.2 3.2 -4.6 -13.5 -14.2 16.1 ? 7.6 0.5 9.6 10.4 16.0 6.1 -6.7 3.1 9.1 6.7 3.5 6.2 4.2
Following the worst 1-year price returns for bonds
Since 1926, average 1-year returns after (price only)
13.0%
15.5%
4.2%
Stocks
Bonds total Bonds price only returns
Source: Morningstar as of 4/30/22. U.S. bonds represented by theIA SBBI US Gov IT Index from 1/1/26 to 1/3/89 and the Bloomberg U.S. Agg Bond TR Index from 1/3/89 to 4/30/22, U.S. stocks are represented by the S&P 500 Index from 3/4/57 to 4/30/22 and the IA SBBI U.S. Lrg Stock Tr USD Index from 1/1/26 to 3/4/57, unmanaged indexes that are generally considered representativeof the U.S. stock market during each given time period. Bonds (price returns only) are represented by the IA SBBI US Gov IT Cap App Index from 1/1/26 to 1/3/89 and the Bloomberg U.S. Agg Bond PR Index from 1/3/89 to 4/30/22. Past performance does not guarantee or indicate future results. Index performance is for illustrative purposes only. You cannot invest directly in the index.
USRRMH0522U/S-2186297-5/11
FED RATE HIKES
The Fed raising rates by ? percent or more
Average returns following a Fed rate hike of ? percent+
(1/1/90 - 4/30/22)
Date of Fed rate
hike
May 16, 2000
Hike Return 6 months later Return 1 year later amount (in bps) Stocks Bonds Stocks Bonds
50
-3.8% 7.8% -13.0% 13.8%
Feb 1, 1995
50
21.1% 9.0% 38.7% 17.0%
Nov 15, 1994
75
14.3% 9.6% 29.8% 16.8%
Aug 16, 1994
50
6.6%
2.8% 24.5% 10.5%
May 17, 1994
50
6.3%
0.2% 22.3% 10.7%
Avg
8.9%
5.9% 20.5% 13.8%
Average 6-month return after a Fed rate hike of ? percent+
(1/1/90 ? 4/30/22)
8.9%
5.9%
Average stock return (6 months later)
Average bond return (6 months later)
Source: Morningstar as of 4/30/22. U.S. bonds represented by theIA SBBI US Gov IT Index from 1/1/26 to 1/3/89 and the Bloomberg U.S. Agg Bond TR Index from 1/3/89 to 4/30/22, U.S. stocks are represented by the S&P 500 Index from 3/4/57 to 4/30/22 and the IA SBBI U.S. Lrg Stock Tr USD Index from 1/1/26 to 3/4/57, unmanaged indexes that are generally considered representativeof the U.S. stock market during each given time period. Past performancedoes not guarantee or indicate future r esults. Index performance is for illustrative purposes only. You cannot invest directly in the index.
USRRMH0522U/S-2186297-6/11
STOCK MARKET RETURNS
3rd worst start to a year for stocks
2022 is on pace to be one of the worst years ever for stocks
3rd worst start to a year for stocks
Since 1926, total return for1/1- 4/30 each calendar year
All 12 month-1s 0.4 -10.4 -10.3
were positive
for -t1he2.f9irst
time ever
-16.3
-9.3
-8.5
-8.3
-8.0
-27.2
Returns following the 10 worst starts to a year
Since 1926, returns the next 8 and 12 months
Year 1932
First 4 months
-27.2
Next 8 months
26.2
Next 12 months
54.6
1939
-16.3
19.0
17.7
2022 YTD
-12.9
?
?
1970
-10.4
16.0
32.1
1941
-10.4
-1.4
-11.5
1942
-10.3
34.1
61.2
2020
-9.3
30.5
46.0
1973
-8.5
-6.7
-12.6
1960
-8.3
9.5
24.2
1962
-8.0
-0.8
10.8
Avg
-12.2
14.1
24.7
1932 1939 2022 YTD 1970 1941 1942 2020 1973 1960 1962
Source: Morningstar as of 4/30/22.. U.S. stocks are represented by theS&P 500 Index from 3/4/57 to 4/30/22 and the IA SBBI U.S. Lrg Stock Tr USD Index from 1/1/26 to 3/4/57, unmanaged indexes that aregenerally considered representative of the U.S. stock market during each given time period. Past performance does not guarantee or indicate future results. Index performance is for illustrative purposes only. You cannot invest directly in the index.
USRRMH0522U/S-2186297-7/11
STOCK MARKET VOLATILITY
Volatility picking up in 2022
Number of single day stock market returns of +/-2% or more
S&P 500, past 20+ years by calendar year (1/1/01 - 4/30/22)
80 72
60
52
680 days
without a 2%
trading day
40
(10/2/03? 6/14/06)
25
20
15
17
002 0
55 35
310 days without a 2% trading
day (11/8/16?
2/1/18)
2022 on pace for
36
44
22
20
10 9 64 7
12
7
7
0
Source: Morningstar as of 4/30/22. Stock market represented by the S&P 500 Index.Past performance does not guarantee or indicate future results. Index performance is for illustrative purposes only. You cannot invest directly in the index.
USRRMH0522U/S-2186297-8/11
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