February has been an unusual month for the markets as the S&P 500 has gained over 200 points in only 19 trading days and setting a new record high of 3934 on 12 February. This week at mid-day on Thursday, the S&P 500 dipped below that centurion 3,900 level, but then reversed course closing above it by the closing bell and remaining above that level to close the week at 3,906. Contributing to this scenario was the 10-year Treasury yield rising to 1.34%, the highest in almost a year, causing fears of higher inflation. From an economic perspective, on Thursday Treasury Secretary Yellen stated that a $1.9 trillion stimulus deal could help the U.S. get back to full employment in a year. And next week, Federal Reserve Chairman Jerome Powell will most likely echo the above sentiments when he delivers his semi-annual testimony on the economy before Congressional Committees. From a technical perspective, the S&P 500’s Bollinger Band Index (BBI) has increased from 45 to 67 over the last two weeks. However, the slope of increase seems to be subsiding and hopefully will keep us below that cautionary 70 level. For TSP TIPS, the equity funds took a breather just like their underlying indices, and the Performance Ranking (PR) still has the S and C funds in the Top Two positions respectively. As such, we recommend remaining with our current allocation as we close out February.
February has been an unusual month for the markets as the S&P 500 has gained over 200 points in only 19 trading days and setting a new record high of 3934 on 12 February. This week at mid-day on Thursday, the S&P 500 dipped below that centurion 3,900 level, but then reversed course closing above it by the closing bell and remaining above that level to close the week at 3,906. Contributing to this scenario was the 10-year Treasury yield rising to 1.34%, the highest in almost a year, causing fears of higher inflation. From an economic perspective, on Thursday Treasury Secretary Yellen stated that a $1.9 trillion stimulus deal could help the U.S. get back to full employment in a year. And next week, Federal Reserve Chairman Jerome Powell will most likely echo the above sentiments when he delivers his semi-annual testimony on the economy before Congressional Committees. From a technical perspective, the S&P 500’s Bollinger Band Index (BBI) has increased from 45 to 67 over the last two weeks. However, the slope of increase seems to be subsiding and hopefully will keep us below that cautionary 70 level. For TSP TIPS, the equity funds took a breather just like their underlying indices, and the Performance Ranking (PR) still has the S and C funds in the Top Two positions respectively. As such, we recommend remaining with our current allocation as we close out February.