Equity markets experienced significant volatility last week, driven largely by a tech‑sector selloff sparked by concerns over capital‑expenditure plans and renewed fears of an emerging AI-driven bubble. By Friday, sentiment had reversed sharply: the major indices rebounded, and the Dow Jones Industrial Average reached a new all-time high, moving closer to the psychologically important 50,000 level. This strength in the Dow underscores the ongoing market rotation into cyclical and value stocks, which continue to provide important balance for investors navigating heightened volatility in the tech sector.
Cryptocurrency markets told a very different story. Bitcoin saw a sharp drop, nearly reaching $60,000, following U.S. Treasury Secretary Bessent’s comments raising fears of a potential regulatory “death spiral.” This episode once again highlights the vulnerability and speculative nature of crypto assets - particularly for those who view them as potential reserve holdings. The correction represents a greater than 50% price drop from the October high, touching $126,000. Despite bouncing slightly higher than $70,000to close the week, concerns linger with speculation that there may be more downside risk in the near future.
Rates markets responded in the opposite direction from risk assets. As equities and crypto sold off early in the week, Treasuries rallied, with the 10-year yield falling to nearly 4.15% before settling just above 4.20%- remaining within its recent trading range. The front end of the curve was even more sensitive, declining on weaker employment data and expectations that the Federal Open Market Committee (FOMC) may be more aggressive with future rate cuts. The 2-year Treasury yield fell below 3.50%, a key threshold it has respected in recent months.
The reopening of the U.S. government has shifted key releases:
Markets will also look closely at revisions to the preliminary estimate for job losses, which came in at –911,000 losses from the April 2024 to March 2025 period- an unusually weak figure that is expected to be revised but likely not enough to materially alter the softening labor‑market narrative.
From the Municipal Desk (with contributions from Ryan Riffe):
Municipals were on cruise control for the first week of February as the market continued to trade with strength. As expected, in line with Treasuries, the municipal curve extended its steepening trend. By the end of the week, front-end rates saw yields drop by as much as eight basis points while 2046 and longer maturities remained unchanged. Weekly fund inflows have consistently hovered around $2 billion for several weeks now. This, combined with February's reinvestment capital, has forced municipals to continue trading in a tight environment. With new issue supply on the lighter side, investors continue to look at customer bid-wanteds to source paper for inquiries. This has placed added pressure on the market, where high-grade spreads continue to tighten across the curve.
The market will look to price in more than $14 billion of new issue supply next week, which will be the largest weekly calendar year to date. We expect this to be well received by customer demand, though secondary market activity may taper as investors shift their attention toward the primary.
30-Day Visible Supply @ $16.14Billion
Weekly Supply @ $14 Billion
2-YR Ratio @ 60%
3-YR Ratio @ 59%
5-YR Ratio @ 58%
10-YR Ratio @ 61%
30-YR Ratio @ 88%
An index is unmanaged and not available for direct investment. Definitions sourced from Bloomberg.
The Bloomberg Barclays Global Aggregate Negative Yielding Debt Market Value Index represents the portion of the Bloomberg Barclays Global Aggregate Index that measures the aggregate value of global debt with a negative yield. • The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization. • The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.• The Cboe Volatility Index® (VIX) is a calculation designed to produce a measure of constant, 30-day expected volatility of the US stock market, derived from real-time, mid-quote prices of weekly S&P 500® Index (SPX) call and put options with a range of 23 to 37 days to expiration.• The ICE BofA MOVE Index is a yield curve weighted index of the normalized implied volatility on 1-month Treasury options. It is the weighted average of implied volatilities on the CT2 (Current 2 Year Government Note), CT5 (Current 5 Year Government Note), CT10 (Current 10 Year Government Note), and CT30 (Current 30 Year Government Note), with weights 0.2/0.2/0.4/0.2 respectively.• The Markit CDX North America Investment Grade Index is composed of 125 equally weighted credit default swaps on investment grade entities, distributed among 6 sub-indices: High Volatility, Consumer, Energy, Financial, Industrial, and Technology, Media & Tele-communications. Markit CDX indices roll every 6 months in March & September. • The Markit CDX North America High Yield Index is composed of 100 non-investment grade entities, distributed among 2 sub-indices: B, BB. All entities are domiciled in North America. Markit CDX indices roll every 6 months in March & September. • The U.S. Dollar Index (USDX) indicates the general international value of the USD. The USDX does this by averaging the exchange rates between the USD and major world currencies. Intercontinental Exchange (ICE) US computes this by using the rates supplied by some 500 banks.
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