- Risk-on appetite in February after the announcement of ECB QE
- US data still mixed, though Fed appear more hawkish, market is pricing a mid-year rate hike
- Best performing bonds came from holdings in Russia
- China growth lowered to “around 7%” for 2015, highlighting the need for higher quality and more sustainable growth
Asset markets witnessed a risk-on appetite as focus was once again dominated by central bank easing, in particular the launch of ECB QE. Greece once again took centre stage narrowly avoiding the potential “Grexit” as the eurozone agreed on a short-term bailout extension. The US dollar continued its rally into February. US data was once again mixed, however, the Fed appear more hawkish particularly after January’s non farm payrolls number was released above expectations. Over the month oil rebounded with Brent up 16% and the yield on the ten-year US Treasury rose 35 basis points to end the month at 1.99%. Outside of the US, the trend to negative yields continued; in Europe Germany sold five-year debt at a negative yield for the first time, joining the likes of Denmark, Finland, Austria, Switzerland and the Netherlands, all with negative yielding five-year bonds.