Envestnet | PMC provides independent advisors, broker-dealers, and institutional investors with comprehensive manager research, portfolio consulting, and portfolio management to help improve client outcomes. Every month our Global Macro Team offers insights into the themes currently shaping the markets to help you quickly take note of recent trends that your clients may be inquiring about.

Treasury Yields Jump

Driven by vaccination progress and economic recovery optimism, Treasury yields jumped in February. The ten-year Treasury yield closed the month at 1.41 percent after surging past 1.6 percent at one point, ending 34 bps higher than the January close.1

While Treasury yields are still near historic lows, the speedy rise is concerning. Government bond yields in most other major economies also rose sharply during the month, with the German ten-year government bond yield up 26 bps and Japan’s ten-year government bond yield up 11 bps.2

Learn more about the Treasury yield surge and its impact on the PMC website.

Value Stocks Outperformed Growth Stocks Sharply

While the broad S&P 500 Index registered a solid gain of 2.8 percent in February, growth stocks trailed value stocks significantly.3 The Russell 1000 Growth Index was essentially flat for the month, while the Russell 1000 Value Index jumped more than six percent.4, 5 The growth-heavy Information Technology and Consumer Discretionary sectors struggled to break even for the month, while the Energy and Financials sectors, two value-heavy sectors, each posted double-digit gains.

Active Funds Outperformed Their Benchmarks

Year-to-date, as of February 12, 57 percent of large-cap mutual funds outperformed their benchmarks.6 This was the best performance for active managers in over a decade.

Mega-cap technology stocks, such as the FANG stocks that dominate the benchmarks, have been struggling so far this year, and most large-cap mutual funds underweight them. In addition, stock market volatility has been elevated so far this year, providing significant stock mispricing opportunities for active money managers.

Source: Goldman Sachs; as of February 12, 20216

The SPAC IPO Market Continued To Boom

90 SPACs raised $32 billion in IPOs in February, pushing the YTD total to 175 SPAC IPOs with $56 billion raised.7 It is all but certain that SPAC IPOs in 2021 will break the previous record year of 2020, when we saw 228 SPAC IPOs with $77 billion raised.

Convertible Bonds Continue To See Record Issuance

After raising $190 billion through convertible bonds last year, global companies have continued to tap into investor appetite by issuing around $19.7 billion worth of bonds in first seven weeks of 2021. Out of this total, close to $8.6 billion was raised by U.S. companies.8

Convertibles had a record year in 2020, as the Bloomberg Barclays U.S. Convertibles index returned 50 percent, thus outperforming both the S&P 500 and Nasdaq 100 indices. While in 2020, we saw the companies battered by the pandemic (like airlines and cruise lines) tapping the convertible markets, in 2021 the headlines were grabbed by MicroStrategy, which issued convertible bonds to buy bitcoins. These bonds, which were issued at zero percent coupon, saw huge investor demand despite being a pure play on bitcoin prices.9

If you’d like additional information about these themes or have questions, please contact PMC.Research@envestnet.com.


  1. Netty Idayu Ismail and Farah Elbahrawy, “Traders on Yield Watch in Bond Markets ‘Not for Faint-Hearted,” last modified on February 28, 2921, https://www.bloomberg.com/news/articles/2021-02-28/traders-on-yield-watch-in-bond-markets-not-for-faint-hearted.
  2. “Rates & Bonds,” Bloomberg.com, last accessed on March 5, 2021, https://www.bloomberg.com/markets/rates-bonds.
  3. “S&P 500 Index,” Bloomberg.com, last accessed on March 5, 2021, https://www.bloomberg.com/quote/SPX:IND.
  4. “Russell 100 Growth Index,” MarketWatch.com, last accessed on March 5, 2021, https://www.marketwatch.com/investing/index/RLG.
  5. “Russell 1000 Index,” Bloomberg.com, last accessed on March 5, 2021, https://www.bloomberg.com/quote/RIY:IND.
  6. Goldman Sachs, last modified on February 12, 2021.
  7. Vildana Hajric and Lu Wang, “SPAC Froth Turns on Itself With Stocks Plunging 20% in Two Weeks,” Bloomberg.com, last modified on March 5, 2021, https://www.bloomberg.com/news/articles/2021-03-04/spac-froth-turns-on-itself-with-stocks-plunging-20-in-two-weeks.
  8. Patturaja Murugaboopathy, “Global companies raise massive cash through convertible bonds at start of 2021,” Reuters.com, last modified on February 17, 2021, https://www.reuters.com/article/us-global-markets-convertibles-graphic-idUSKBN2AH1C4.
  9. Katherine Greifeld and Crystal Kim, “MicroStrategy Boosts Bonds-for-Bitcoin Offering, Sets 0% Coupon,” Bloomberg.com, last modified on February 17, 2021, https://www.bloomberg.com/news/articles/2021-02-17/microstrategy-raises-bonds-for-bitcoin-offering-to-1-05-billion?.

The information, analysis and opinions expressed herein are for informational purposes only and do not necessarily reflect the views of Envestnet. These views reflect the judgment of the author as of the date of writing and are subject to change at any time without notice. Nothing contained in this piece is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Past performance is not indicative of future results.

Written By:
PMC Global Macro Team

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