Financial markets did not deliver much to investors in January, with the global equity market trading choppy and ultimately flat while the U.S. bond market trended slightly down during the month. For investors holding well-diversified portfolios, there were a few bright spots. While the broad U.S. and developed foreign equity markets went nowhere, domestic small-cap companies continued their run of outsized returns by advancing 5.0%, and emerging-market stocks posted gains of 3.1%. One particularly strong month does not confirm a trend, but we have noticed certain equities continuing to make up ground on large-cap U.S. stocks. When looking back over the previous three months, domestic and international small-cap stocks, emerging-market stocks, and even large-cap international stocks have performed well on a relative basis. This recent shift serves as a useful reminder of the importance of diversification.
The performance of the U.S. bond market has shifted as well. One of the highest performing types of bonds has been long-maturity Treasurys. Last year, these Treasurys benefited most from the fall in yields. However, over the past three months long-maturity Treasurys have lost nearly 3.6% as interest rates rose modestly. In contrast, the overall U.S. bond market is down about 1% this year, while inflation-protected securities, short and intermediate-term municipal bonds, and mortgage-backed securities have all increased in value.
The fact that there have been no dramatic movements in the broad stock or bond markets last month does not necessarily mean that volatility is behind us. As the world transitions to a post-COVID environment, we will have various obstacles to navigate. Fiscal stimulus, business closures, and central bank policies have led us to an unusual mix of low interest rates, higher debt levels, and high valuations. For both investors and policymakers, navigating these hurdles carefully over the coming years will be paramount.
From a healthcare standpoint, we have seen several reassuring developments. Johnson & Johnson and Novavax released promising clinical trial data for two new vaccine candidates near the end of January. And while the rollout of the U.S. vaccination program has been slow, it appears that some of the distribution challenges are being met. If the two new vaccine candidates receive regulatory approval, these challenges will be even easier to meet. Together these two companies plan to supply enough doses for 155 million Americans before July, and Novavax claims to have a global supply network capable of producing two billion doses this year. This is certainly welcome news, both from a market and global health perspective.
We wish you a healthy and safe winter, and look forward to providing guidance as we move throughout the year. If there is anything we can help you with, please reach out. We are here for you.