Market Commentary — February 22, 2021
Rising interest rates weighed on stocks this week thanks to a combination of hopes for future stimulus, continued easing of monetary policy, better-than-expected fourth-quarter earnings, and more progress in fighting the coronavirus. The yield on the benchmark 10-year Treasury note rose to its highest levels in nearly a year.
Good news has investors spooked about future inflation and an overheated economy. But economic data continues to support the need for more stimulus. Weekly jobless claims jumped to 861k, the most since January. And housing data also missed to the downside, as housing starts retreated from a nearly 14-year high.
In addition, a severe winter storm wrought havoc over much of the Midwest and South, particularly in Texas, where millions were without water or power. Besides the human toll and suffering, the shutdown of much of the region’s massive oil and gas infrastructure is also expected to have negative ripple effects across the national economy.
ETF investors dumped $1.8 billion in fixed-income assets last week on speculation that central banks might have to reduce accommodative monetary policies to stave off inflation. Investors were net purchasers of government-mortgage ETFs (+$396 million) and government-Treasury ETFs (+$328 million), while being net redeemers of corporate high-yield ETFs (-$1.2 billion), corporate investment-grade debt ETFs (-$620), and international & global debt ETFs (-$593 million).
Once again, make sure you get your nominations in for 2020’s ETF.com Awards! Nominations close on February 28th.
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