Every Friday, Brian Jacobsen provides perspective on key events and topics of the current week and his thoughts about what the week ahead may hold. Here’s his report for the week of February 20–26, 2021. Plus: Since we’re starting a new month on Monday, there’s a quick recap of the big stories from February.

The week that was

  • Well, that escalated quickly. The yield on the 10-year Treasury note started the week around 1.33% and got as high as 1.61% after a Treasury auction of 7-year notes was not very well received. Maybe this was the “taper tantrum” everyone has been waiting for. The 10-year Treasury yield is finally out of the COVID-19 hole that was dug in 2020.
  • A study based on Israel’s experience with Pfizer Inc./BioNTech SE’s COVID-19 vaccine indicates that the vaccine not only helps the vaccinated from getting ill, it also helps them from getting infected in the first place. The study said the vaccine is 89.4% effective at preventing infections. Separately, staff at the U.S. Food and Drug Administration said the Johnson & Johnson COVID-19 vaccine is safe and effective. In clinical trials, the single-shot dose was 72% effective. This should pave the way for an emergency-use authorization.
  • Going into earnings season for the fourth quarter, companies in the S&P 500 Index were expected to collectively show an 8.32% year-over-year decline in earnings per share. Sales were expected to rise 0.34%. With 96% of S&P 500 companies reporting earnings, earnings growth is coming in at 3.78% year over year and sales are coming in at 3.19%, both better than expected.


  • European Central Bank (ECB) President Christine Lagarde said the bank is “closely monitoring the evolution of longer-term nominal bond yields.”
  • Federal Reserve (Fed) Chair Jerome Powell testified before both houses of Congress. His message hasn’t changed since the Fed’s last meeting:
    • The Fed is nowhere close to pulling back support for the economy.
    • A vaccine is the best medicine for an economic recovery.
    • The Fed is optimistic about an acceleration of economic activity in the second half of the year.
  • Hong Kong stocks fell after the government there announced it would increase its stamp duty on stock trades.


  • U.K. Prime Minister Boris Johnson provided a four-step reopening plan for the U.K. economy, beginning March 8 with school reopenings. He’s aiming for a full reopening by June 21.
  • Brazil’s markets were shaken when President Jair Bolsonaro fired the head of oil giant Petrobras Distribuidora S.A. This seemed inconsistent with his administration’s pledge to be more market friendly.
  • A slightly slimmed-down version of President Biden’s proposed $1.9 trillion stimulus bill will likely be passed by the House and Senate by March 14, according to Senate Majority Leader Schumer. Emergency unemployment benefits expire then, so the timing will push the expiration date out to September. Because Democrats are using reconciliation where only a majority vote is required, the items included must be “budget related.” The Senate parliamentarian ruled that the minimum wage increase included in the House version of the bill is out of order and cannot be included.
  • President Biden ordered an airstrike against Iran-backed militia in Syria. This was in response to rocket attacks against U.S. forces in Iraq.

The week to come

  • The first Friday of each month brings the employment situation report. The coming week starts with the Institute for Supply Management® (ISM®) Manufacturing Index. The ISM Services Purchasing Managers Index® is released on Wednesday. The Fed’s Beige Book (a collection of qualitative information from around the country) is also released on Wednesday.
  • The Reserve Bank of Australia has a policy meeting Monday evening. There is an Organization of the Petroleum Exporting Countries meeting during the week, when it’s likely that Saudi Arabia will announce that it will stop curtailing production given the improvement in the economic outlook and increase in oil prices.

A look back at February’s big stories

  • Former President Trump was not convicted by the Senate on impeachment charges.
  • Mario Draghi became Prime Minister of Italy. Formerly, he was president of the ECB. He said he wants to reboot Italy’s economy and improve the pandemic response.
  • Earnings season was much better than expected. The consensus was calling for the S&P 500 Index to have a decline in year-over-year earnings, but the companies in the index managed to post year-over-year growth instead.
  • The economic picture continued to improve—or at least not get much worse, depending on where you look. U.S. retail sales jumped in January after many households got stimulus checks and after some restrictions were lifted. Both manufacturing and services in the U.S. stayed buoyant. Outside the U.S., manufacturing has been doing pretty well as many companies have been restocking their depleted inventories. Services have suffered under various lockdowns. Once those restrictions get lifted as vaccine deployment accelerates and the weather improves, other countries could experience a nice jump in economic activity in the spring.

Thanks for reading, stay informed!

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