Market Commentary — March 1, 2021

Stocks continued to pull back in response to higher interest rates and inflation fears. The S&P 500 posted its biggest weekly decline in a month, while the NASDAQ Composite Index experienced its worst decline since October.

Last week, the yield on the 10-Year Treasury spiked to 1.5%. The fear is that higher yields on long-term bonds and inflation concerns could spark an exodus from equities into fixed income. Given the still low rates being paid by bonds, this “substitution effect” argument seems a little preposterous. But we will likely see a market leadership change, with a rotation out of high-valuation tech names into companies that represent a better value and those benefiting from the re-opening trade.

Even if the Fed remains committed to keeping short-term interest rates low to restore employment, all the cheap dollar liquidity and fiscal stimulus sloshing around have driven up asset prices like stocks, commodities, and bitcoin.

Pumping even more liquidity into the system, the House passed a $1.9 trillion Covid relief bill offering $1,400 direct payments, a $400-a-week federal unemployment bonus, a per-child allowance of up to $3,600 for one year, and billions of dollars to distribute vaccines and to assist schools and local governments.

The bill also includes a provision to increase the minimum wage to $15 per hour, phased in over four years. But that provision is expected to die in the Senate.

Inflation? What inflation?

Jane Edmondson
CEO and Co-Founder

Share this Market Commentary


EQM Indexes LLC is a woman-owned firm dedicated to creating and supporting innovative indexes that track growth industries and emerging investment themes. Co-founded by Jane Edmondson, a former Institutional Portfolio Manager with more than 25 years in the investment industry.


The information provided on this page is for illustrative purposes only and is not intended to serve as investment advice. The information provided is as of particular time and subject to change at any time without notice.

It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments based on that index. EQM Indexes does not sponsor, endorse, sell, promote or manage any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. EQM Indexes Indices makes no assurance that investment products based on the Index will accurately track index performance or provide positive investment returns. EQM Indexes is not an investment advisor, and makes no representation regarding the advisability of investing in any such investment fund or other investment vehicle. A decision to invest in any such investment fund or other investment vehicle should not be made in reliance on any of the statements set forth in this article. Prospective investors are advised to make an investment in any such fund or other vehicle only after carefully considering the risks associated with investing in such funds, as detailed in an offering memorandum or similar document that is prepared by or on behalf of the issuer of the investment fund or other vehicle. Inclusion of a security within an index is not a recommendation by EQM Indexes to buy, sell, or hold such security, nor is it considered to be investment advice.