Last week was a white-knuckle trading week. Equities plummeted as the Nasdaq 100 entered correction territory closing Friday down 11.51% for the year. The S&P 500 is off 8.25% from its early January highs. Last week, concerning inflation and corporate profits accelerated an overall risk off posture by investors. We saw flows from cyclical sectors communication services, financials, and consumer discretionary, towards lower beta sectors like utilities, consumer staples and real estate.
Treasury yields were mixed over the course of the week as the yield curve flattened with shorter duration yields rising moderately and longer duration yields falling moderately. Treasury yields rose significantly on Tuesday as traders priced in some risk that the Federal Reserve may raise rates by 50 basis points in March. The market implied probability of a rate hike for the March meeting increased from 91.5% last week to 99.6% on Tuesday, and settled at 98.6% on Friday.