February 2023 Market Update

Overview

February saw another round of developed market rate hikes. The US, UK and Eurozone all raised rates at their latest meetings, in-line with expectations. Strong economic data lessened recession risk in major economies, but also led to market expectations of interest rate cuts being pushed out further into the future. Higher for longer interest rate expectations were also emphasised by a number of central bank officials through public statements.

The higher rate expectations fed through into higher bond yields and thus lower bond prices for the month. And whilst the lower risk of recession was helpful for equities, this was ultimately outweighed by higher rate expectations and broad equity markets retraced some of their January gains.

Full update below…