Stocks and bonds both fell in February as inflationary data surprised the market by coming in higher than expected, resulting in the market pricing in higher interest rates in conjunction with persistent inflation.

Markets stormed out of the gate in January with both stock and bond markets rallying on expectations that central banks will reverse course in Q4 2023 and cut rates.

The market reversed course in December after hitting the upper band of the trading channel (just above the 200-day moving average) that it traded in during 2022. The S&P 500 finished down 5.2% (in CAD) and the TSX Composite Index fell 4.9%.