posted on March 05, 2020 12:00
Global stocks rose 3.9% in the first half of February before plummeting 11.7% in the second half to finish down 8.2% for the month. Fear of the coronavirus impact hit both U.S. large stocks (-8.2%) as well as international large stocks (-9.0%). Bonds buffered losses with positive returns as intermediate-term bonds (+1.4%) and TIPS (+1.4%) led the pack. Alternatives were mixed with reinsurance (+0.8%) providing a positive return and global REITS (-8.2%) generating the largest loss during February.
- Unemployment ticked up slightly to 3.6%, but in tandem with the welcome news that the labor force participation rate also rose.
- Inflation rose to +2.5% year-over-year, which remains near the Fed target.
- Consumer confidence remained near all-time highs.
- U.S. large value (-9.7%) and small value (-10.4%) both trailed broader U.S. benchmarks.
- Internationally, similar themes played out with large value (-9.5%) and small value (-10.2%) trailing large core.
- Emerging markets (-5.3%) fell less in February in part due to coronavirus-related losses already suffered in January.
- As investors fled risk assets, safe haven bonds made gains. In particular, U.S. Treasuries (+2.7%) were the top performing sector.
- Intermediate-term (+1.4%) and TIPS (+1.4%) were the strongest fixed income performers.
- International bonds (+0.9%) and short-term bonds (+0.6%) also posted positive returns.
- Global REITs (-8.2%) struggled during the market turmoil, while commodities (-5.0%) and managed futures (-2.0%) were also negative for the month.
- Reinsurance (+0.8%) managed to post a positive return due to its lack of correlation with traditional financial markets.
Economic and Market Commentary
Read our latest Economic and Market Commentary for Market Returns Year-To-Date, Market Returns Longer Term Annualized, Economic Indicators, and an Appendix.
Source: Morningstar Direct. This is intended for informational purposes only and should not be construed as legal, investment or financial advice. Please consult your legal, investment and financial professionals regarding your specific circumstances.