February Market Commentary: The Money Illusion


  • Markets have begun to share the Federal Reserve’s “higher-for-longer” interest rate narrative, as inflation levels remain well above the 2% target and recent reports indicate the ongoing strength of the U.S. economy.
  • As interest rates have risen, bond prices have suffered – the Bloomberg U.S. Aggregate Bond Index ended February down 2.6%, the fifth-worst monthly decline since 1993.
  • S&P 500 earnings growth for 2023 has been revised downward to 2.1%, from 5.6% at the start of the year.
  • Retail sales rebounded in January, following two consecutive months of declines. However, the impact of ongoing elevated inflation on consumers’ purchasing power remains unclear, as inflation creates an illusion of strength that is not carried through to inflation-adjusted data.

Read and download the commentary here.

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