March 19, 2021 | Investment Review

Investment Review - March 2021

  1. Equity market volatility picked up in reaction to a sharp increase in bond yields.  Despite this, stock indexes marked gains for the month; the S&P 500 and the Dow Jones Industrial Average gained 3% and the Nasdaq Composite rose 1%.

  2. U.S. listed Exchange Traded Funds saw inflows in February.  ETFs drew $88 billion in February, an amount that is four times the 12-month average.  Investors “bought the dip” in a week when stocks fell, indicating continued confidence in economic strength and growing corporate earnings as the U.S. comes out of the pandemic.

  3. A wave of selling challenged bond and stock markets in the latter half of February.  The stimulus package being negotiated in Congress brought inflation concerns to the fore.  The yield on the 10-year U.S. Treasury note leapt to 1.47%, a historically low rate but its highest level in a year.  The yield on this note started this year at 0.92% and was as low as 0.6% last August.  The 10-year Treasury note is a benchmark for mortgage rates; low borrowing rates have fueled housing and mortgage refinancing activity, boosting economic growth.

Sources: Bloomberg LLC, FactSet, U.S. Commerce Department, Bloomberg Businessweek, IHS iSuppli

Disclosure: This commentary reflects the opinions of Welch & Forbes based on information that we believe to be reliable. It is intended for informational purposes only, and not to suggest any specific performance or results, nor should it be considered investment, financial, tax or other professional advice. It is not an offer or solicitation.

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