February 2025 Commentary: Rain on the Parade

Summary

• Market results were mixed in February. U.S. large-cap stocks ended the month down 1.3%, and U.S. small-cap stocks declined 5.3% while U.S. intermediate-term bonds gained 2.2%.
• Consumer spending declined, but wages increased. Inflation remains persistently elevated.
• It remains unclear how much of the decline in bond yields signals optimism about the Department of Government Efficiency’s impact on the deficit versus concerns over a growth slowdown caused by tariffs.
• Treasury Secretary Scott Bessent is urging markets and consumers to bear the short- term pain of government spending cuts and tariffs for long-term gains stemming from the anticipated boost in domestic manufacturing and capital investment.

Read and download the commentary here.