Analyzing Markets for February as Post-Election Rally Continues

The yield curve flattened in February, with rates at the short end of the curve increasing while declining at longer maturities. The yield on the 10-year Treasury declined 9 basis points last month to 2.36%. The Barclays Aggregate Bond Index increased in February as both Treasuries and investment grade corporates posted positive returns. High yield bonds, yet again, outpaced more interest-rate-sensitive fixed income sectors. Municipal bonds declined slightly during the month.

Economic Data

The Federal Open Market Committee left the federal funds rate unchanged at its two day meeting that concluded on February 1st. The next meeting will conclude on March 15th and indicators show market participants expect a ¼% rate increase. The second reading of fourth quarter GDP remained at a rate of only 1.9%. Housing was solid, with starts, permits and existing home sales all increasing from the prior month. The ISM Manufacturing and Non-Manufacturing Indices signaled continued improving business conditions, and the University of Michigan Consumer Sentiment Index continued to reflect optimism. Manufacturing was mixed, with durable goods orders rebounding and industrial production declining.

P = Partial, S = Second, F = Final Source: Bloomberg

Click here for a PDF of Glenn Dorsey’s Monthly Recap.

This article was written by Clark Capital’s Senior Vice President, Client Portfolio Manager Glenn Dorsey, CFA, CAIA; Clark Capital is a participant in the ETF Strategist Channel.

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