February 2023 Monthly Index Returns
Welcome to March, spring is just around the corner…
February saw the release of a surprisingly strong jobs report, along with higher than expected CPI and PCE numbers, all which led to convincing investors the Fed needs to continue to push interest rates higher. This belief had both a negative impact on both stocks and bonds during the month.
In stocks (equities):
- Opposite from January, all stock indexes shown experienced negative returns in February. The lowest returning benchmark was emerging markets (-6.5%) while the highest was small cap growth (-1.1%). The prospect of rising US interest rates and a rising US Dollar is not a great recipe for emerging market stocks.
- US large caps slightly underperformed their non-US developed counterparts, but US small caps slightly outperformed their non-US developed counterparts.
- Stock index returns remain positive on a YTD basis.
- Keeping everything in perspective, the MSCI ACWI NR USD (a common benchmark for global stocks) has a 3 and 10 yr return of 8.8% and 7.9% respectively, both of which are still quite positive.
In bonds (fixed income):
- With yields rising across the yield curve, all non-cash (e.g. 3 month T-bill) bond benchmarks had negative returns for the month, with longer duration bonds suffering more than their shorter counterparts.
- Outside of the 3 month Tbill, the best performing bond index was ST TIPS, and while the index still fell -0.6%, it was helped by the surprising inflation reports released during the month.
- Non-US bonds (hedged to USD) also held up pretty well, declining only -0.8%.
- Even though yields rose across the curve during the month, the Treasury curve remained inverted at month end. For reference, the 6 month T-bill yielded 5.17% (the highest point) while the 10 yr Treasury yielded 3.92% (the lowest point).
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As an additional note, please keep in mind that these reflect historical performance of the current models, not necessarily how accounts were invested in the past.