Weekly Market Update 12 Mar 2021 – Bullish market sentiments as US Treasury Yields continue rising, encouraged by Stimulus Package
Weekly Market Update 12 Mar 2021 – Bullish market sentiments as US Treasury Yields continue rising, encouraged by Stimulus Package
1. US Treasury yields continue to rise, reflecting market’s optimism. This is buoyed further as the Biden Administration indicated that the stimulus checks will start going out as early as end of the month. US dollar however, traded lower against most of the majors despite reduced jobless claims and stronger economic numbers.
2. ECB’s plans to purchase bonds at a “significantly higher pace” over the next quarter, a decision motivated by the recent surge in yields and concerns over the likely increase in headline inflation. This move stands in contrast with the Fed which does not see the rise in bond yields nor inflation as a problem.
3. UK’s economy contracted less than expected even amidst the coronavirus lockdown, primarily driven by a surprise gain in construction and stronger activity in healthcare. These numbers will factor into BOE’s decision next week if further stimulus is required. However, the first batch of official trade data since the departure of EU exposes the damage done to the flow of goods and services due to Brexit – exports to EU fell 40.7% from Dec to Jan, while imports dropped 28.8%, which officials attribute to ‘temporary factors’.
