February Frenzy

Monthly Market Snapshot: February 2021


Market activity has been frenzied over the past few weeks with heavily shorted stocks being whipsawed and bond yields surging. However, the MSCI All Country World Index still climbed 2.2% in February. In the United States, the S&P 500 gained 2.6% while the Dow Jones jumped 3.2% as the reopening trade progressed further. The tech-heavy NASDAQ added just 0.9% as shares came under pressure due to rising interest rates. The 10-year U.S. Treasury yield rose rapidly from 1.07% to 1.40% by month end.

Rising bond yields on the long end of the curve are largely reflecting a pick up in growth expectations, but also concerns about potential inflation. We expect to see modestly higher inflation prints in the months ahead, but we do not envision the Federal Reserve tightening monetary policy anytime soon. As the market digests the stronger outlook for growth and potential exit of the pandemic, value and cyclical stocks will likely continue to get a bid moving forward.

The Citi Private Bank Global Investment Committee’s (GIC) global equity allocation (including REITS) remains 9.0% overweight. Global Fixed Income is 9.5% underweight. Gold remains 1.5% overweight for diversification and as an inflation hedge. Cash is 1% underweight.