Towards end-2020 risk appetite still dominated financial markets.
The deteriorating virus curves in the U.S. and Europe were weighed against positive news in the areas of vaccines, relief packages and Brexit.
Global equities gained 3.8% in local currencies, according to MSCI ACWI. Translated into DKK, this was an increase of 2.3%. The development was driven by emerging markets, which were up 5% measured in DKK. These favourable trends were also observed in credit markets. Credit spreads (i.e. the yield pick-up on investment in a corporate bond relative to a government bond) of European investment grade and high-yield bonds tightened by 2 basis points and 13 basis points, respectively, in December. This led to excess returns of 0.3% and 0.9%, respectively, on the two categories relative to returns on comparable bonds. The Danish 10Y government bond yield remained unchanged at -0.5% last month.
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