by Vicki Simpson, Trading Analyst, SoundView Advisors

The third quarter was quite interesting! We had summer vacations, a new variant of COVID making its way around the world, kids back to school, the 2020 summer Olympics, backlogs at ports, rising prices and more. Here are a couple investment highlights from the quarter:

The bond market remained relatively flat for the quarter, until the end of September, when the Fed made its intention clear to begin tapering in the near-term and confirmed rate increases could begin in 2022. The Fed’s target for inflation has been met, leaving the job market as the other major indicator for the Fed to begin these changes. Job reports will be closely monitored in the fourth quarter, as well as the inflationary pressure caused by global supply chain bottlenecks. Bond markets will continue to be volatile in anticipation of and as a result of these upcoming policy changes.

Concerns over China’s regulatory actions, as well as potential fallout from real estate developer Evergrande’s default risk, has had investors on edge. Emerging markets had a notable correction in the third quarter and year to date is in negative territory. Fund managers are still optimistic about the long-term outlook for China and emerging markets as a whole, but many are repositioning to invest in companies that align better with China’s economic and social goals, which reduces the risk of scrutiny and regulation.