Market Perspectives (February 2013)
- The rally in equities continued in January, led by smaller cap stocks. Developed international equities kept pace with their domestic counterparts while emerging market equities were the laggards.
- The continuation of the “risk-on” theme led to a steepening of the Treasury yield curve in January. Taxable bond returns were mixed; intermediate-term bonds lost ground to start the year while shorter-duration bonds were flat.
- Prices were relatively unchanged in December as various measures of inflation were largely flat during the month. This allowed the Fed to continue its course, leaving policy unchanged coming out of January’s Federal Open Market Committee meeting.
- Falling inventories and a pullback in federal government defense spending were the primary culprits behind a slight contraction in the economy in the fourth quarter.
- Job creation was mildly disappointing in January but continued its moderate advance, although revisions to previously reported payrolls for November and December were positive. Meanwhile, the unemployment rate edged upward to 7.9% in January.
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