January market review

February 18, 2015

Shortly after the end of each month, our Chief Investment Strategist provides highlights of the market and our funds’ performance. Following is a summarized review of January —


  • Financial markets experienced dislocations to begin 2015, with declines in bond yields and an extension of losses in oil and energy. Global equity markets posted mixed performance for the month of January.
  • U.S. equities were down, the S&P 500 which tracks large cap stocks began the year down 3.00%. The Russell 2000 index, which tracks domestic small cap stocks, was down 3.22% in January.
  • The international equity markets were positive for the month of January. International developed equity index (MSCI EAFE) was up 0.49% in January. Emerging markets (MSCI EM), were up 0.60% in January. The Euro was down 7.2% against the dollar for January.
  • The Japanese Index (Nikkei 225) returned 1.28% in January. The US dollar rose against major currencies, reaching a 7-year high against the Japanese yen.
  • In January, U.S. fixed income rates rallied strongly across the curve. The 30-year, decreased 53bps, the 10-year decreased 55bps, while the 2-year decreased by 22bps. The Federal Reserve again left the overnight lending rate unchanged at 0-0.25%.
  • Corporate bond prices increased in January. The Barclays Aggregate Index was up 2.10%. The Credit Suisse Leveraged Loans Index (bank loans) was up 0.26% for January.


  • According to advanced estimates released by the Bureau of Economic Analysis, the U.S. economy, measured by real gross domestic product (GDP), increased at an annual rate of 2.6% in the fourth quarter of 2014. This estimate follows the strong annual growth rate of 5.0% in the third quarter.
  • The Fed met in January for the first time in 2015. Chairwoman Yellen stated that the Fed would be patient and reiterated, yet again, that the Fed has no intention of raising rates before June 2015. Speculation that the Fed might raise rates earlier than forecast (mid-2015) was tempered by the statement.
  • Economic activity in the manufacturing sector continues to expand, but at a slower pace in January. The January the U.S. PMI reading came in at 53.5, a decrease of 1.6 percentage points when compared to December. A reading above 50 is considered economic expansion.
  • U.S. job growth increased in January. The Labor Department reported total nonfarm payroll employment increased by 257,000 in January, beating analysts’ forecasts of 234,000. Full-time employment surged to 120 million for the first time since July 2008. Nonfarm payroll employment for November and December 2014 were 147,000 higher than previously reported. The unemployment rate ticked up slightly to 5.7%, from 5.6% in December 2014.
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