Behind the Numbers: February 2010 Market Review

An interesting month both on our global economic landscape and in the markets.

Risks remain high and in large measure presented themselves in abundant fashion in the Euro-zone, but markets rebounded. What gives?

Let’s review the market moves for February. The figures provided for the respective markets are: year-end 2009; month-end statistics; month-to-date % change; and year-to-date % change.


The U.S. dollar continued its positive trend. The greenback benefited primarily against the Euro given the ongoing problems in Greece, but also from the rise in the discount rate mid-month. We did not witness an underperformance in risk assets (commodities and equities) given linkage of the currency to assets via the dollar carry trade. This correlation bears watching in the weeks and months ahead.


A solid rebound across the board as selected domestic manufacturing data points to improvement in this corner of our economic landscape. Can the improvement in manufacturing be sustained going forward given questionable consumer appetites? Can the positive performance in commodities be sustained if issues in Asia (rising rates) and emerging economies (excessive debt in eastern Europe) are elevated rather than lessened. More critical questions needing to be addressed and answered.


Domestic equity averages were up on average 3-4% given some positive earnings reports and in sympathy with a solid rebound in the commodities space. International equities and emerging markets continue to lag given concerns of higher rates in Asia and problems in the Euro-zone.

Moving right along . . .


Interest rates on government debt largely marked time as the front end of the market is supported by the continuing accomodative policy of the Fed to keep the Fed Funds rate at 0-.25% for an extended period. High yield rebounded in sympathy with the equity markets’ move higher.

In my opinion, the bond market looks overpriced given the ongoing risk of defaults (corporate and consumer) but also given the massive deficits at the federal, municipal, and consumer levels. Each of these sectors of our economy have enormous funding needs. As Uncle Sam lessens his ability to provide that funding, I believe interest rates have to move higher.


Risks remain abundant, including:

1. Global economy remains challenged. Greece is on the edge of a sovereign default.

2. Our domestic economy, especially within the labor and housing sectors, continues to face an uphill climb. State and municipal finances are a mess. Consumer confidence declined in a meaningful fashion in February.

3. Washington remains a political and fiscal mess. You already knew this.

4. Financial regulatory reform, including the Volcker Rule to remodel banks, is not exactly leaving Wall Street with a warm and fuzzy feeling, but will likely be watered down and ultimately only marginally impactful and effective.

5. The Fed will keep the pedal to the metal on one hand (maintaining Fed Funds rate at 0-.25% for an extended period) while the Fed and Treasury will try to apply the brakes by withdrawing some supports elsewhere.

Navigate accordingly.

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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