This Weekly Market Update reviews the top market headlines: Mortgage Rates Rise with U.S. Treasury Yields, U.S. Treasury Yields Climb, Retail Sales Soar in January

Top Three Market Headlines 

Retail Sales Soar in January: Sales at retail establishments surged in January, according to the U.S. Department of Commerce. Data showed that sales at online retailers, restaurants, and brick-and-mortar stores increased 5.3% in January from the prior month. Following three months of decline, January’s gain was the strongest monthly increase since June of 2020. Additional government stimulus payments and eased Covid-19 related restrictions on businesses helped drive the strong spending growth rate. As consumers continue to spend money on items related to their homes, the strongest retail sales gains in January came from home improvement and work-from-home products such as furniture and electronics.

U.S. Treasury Yields Climb: Yields on longer-dated U.S. Treasury bonds last week hit their highest levels since February of 2020. The 10-year Treasury yield ended the week at 1.34%, up nearly half a percentage point since the start of the year. Meanwhile, the 30-year U.S. Treasury yield closed at 2.13%, versus 1.65% at year-end. These moves have produced the steepest yield curve in nearly four years, with the spread between 10-year and 2-year yields widening to nearly a full percentage point. Rising expectations that relaxed COVID-19 restrictions and additional fiscal stimulus will spur accelerated rates of economic growth and inflation have keyed the recent rise in rates.

Mortgage Rates Rise with U.S. Treasury Yields: With Treasury bond rates rising, mortgage rates have also begun to climb from recent lows. The average rate for a 30-year fixed loan reached 2.81% last Thursday, according to Freddie Mac, up from 2.67% at the start of the year and the highest level in three months. Mortgage rates have remained below 3% since July of last year, providing a strong boost to the housing market, though a continued upward trend in rates may begin to dent affordability and purchase activity.

As of February 19, 2021 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -0.75% 5.32% 5.32% 19.18%
S&P 500 -0.68% 4.23% 4.23% 17.44%
Russell 2000 -0.98% 14.88% 14.88% 35.68%
MSCI EAFE -0.93% 4.07% 4.07% 13.09%
MSCI Emerging Markets -0.53% 10.88% 10.88% 32.40%
FTSE NAREIT -1.04% 4.48% 4.48% -8.18%
Bloomberg Commodity 1.47% 9.29% 9.29% 11.61%
Barclays U.S. Aggregate -0.57% -1.80% -1.80% 3.51%

WSJ 2/18/21, MarketWatch 2/19/21, CNBC 2/19/21, Reuters 2/19/21, Bloomberg 2/18/21, FactSet. Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.