As we move forward in a COVID-riddled new year, it’s interesting to look back at what turned out to be the most surprising economic outcomes from last year. Here are three of Blackstone’s 2021 surprises that we found most intriguing.
#1 Accommodative monetary policy
We were truly surprised to see how accommodative the Fed has been in its propping up of the economy through fiscal and monetary stimulus. The age of “Modern Monetary Theory” has been born, a time in which lawmakers are more tolerant of deficits and the threat of inflation than ever before.
#2 Business growth “self-sustaining”
Many of us underestimated the momentum with which businesses came back in 2021. Growth was much more robust than what was anticipated, to that level that Blackstone classified recovery as “self-sustaining.” With multiple rounds of stimulus fueling the economy, businesses activity has been so strong that rate hikes are on the horizon.
#3 Tepid bond yields
As bond yields rise in response to lower bond prices, it was expected that the 10 year yield would increase to 2%. To our surprise, yields never got that high as demand held fast, keeping Treasury prices high and yields tepid. Despite concerns about the debt ceiling and lofty inflation, the US Treasury remains a bastion of safety and security in the eyes of the world.
Nobody knows for sure what 2022 will behold. If you would like to discuss your portfolio or have any questions about your financial plans for this year, please contact us.
Sources: Wien, Byron, and Zidle, Joe. Blackstone. The Ten Surprises of 2021. https://www.blackstone.com/news/press/byron-wien-and-joe-zidle-announce-the-ten-surprises-of-2021/