2022 was a difficult year for both the stock market and the bond market. Fortunately, January started this year off on a positive note only to give back some of the gains in February.
So here is where we are now (2/28/2023).
*The S&P 500 is up 3.7%.
* Our Federal Reserve continued to raise their short-term interest rate target. It is currently at 4.5%-4.75%.
*Consumer Price Index is now up 6.4% year over year. This is somewhat lower the last year, but still stubbornly high.
*Rising dramatically last year to a high of 4.2%, the interest rate on the 10 year Treasury bond back off to 3.4% in early February, only to start increasing back to near 4% by month’s end.
*Most notably, the yield curve is inverted. The interest rate on a 2 year Treasury bond is about 4.9% (due to the Fed’s hikes), while the rate on a 10 year Treasury bond is only just below 4%. This is evidence of The Federal Reserve’s recent policy of slowing inflation while maintaining economic growth.
As stated in our previous “Insights and Observations,” we at WST believe that progress will continue to happen in fits and starts, and markets will be volatile. In other words, while the short run has often proven difficult for markets, the long run has most often been met with success.
Know what you own, do not overinvest, and stick with quality.
-Cliff Jarvis