The shortest month of the year, February, is traditionally an uninspiring one for markets, with data for the US equity market showing that since 2000 US equities have delivered an average return of – 2.1% during the month, some way below the average +0.7% return for non-February months since the turn of the century. As covered later in this piece, February 2024 bucked the trend, thanks in part to ongoing strength in a small handful of US mega caps.
It was also a month in which interest expectations continued to recalibrate from very dovish positioning at the end of 2023. This occurred in a relatively calm fashion, with volatility in both equity and fixed income markets subdued, and below their average over the past 12 months, although volatility in fixed income markets remain elevated when assessed over a longer time frame.
