Macroeconomic/ geopolitical developments
- President Biden’s $1.9 trillion COVID relief bill was passed into law this week.
- A lower-than-expected US CPI report on Wednesday calmed inflationary worries and built on the strong US jobs report from the prior week.
- This sent value stocks surging higher and allowed for a rebound in growth stocks, which continue to lag because of inflation worries and higher interest rate concerns.
- The last week again saw a surge back higher for global yields, particularly in the US and notably at the longer end of yield curves.
- The European vaccination program continues to lag behind the vaccine rollout in the US and the impressive UK vaccination program.
- The number of cases, hospitalisations and deaths in the UK continues to fall, but cases in some parts of Europe are on the rise again.
- Italy has been forced back into another lockdown with other areas of Europe reintroducing more stringent measures.
Global financial market developments
- Major global equity averages rebounded last week, initially led higher by European indices as the DAX and EURO STOXX 50 hit record and multi-month highs respectively.
- US indices were pulled higher by the Dow Jones Industrial Average hitting a new all-time-high, later joined by the S&P 500.
- The tech and growth stock heavy averages, the Nasdaq 100 and Composite did manage rebounds from recent weakness but remained notably below record peaks.
- Financial markets continue to monitor the global bond market sell off with US bond markets leading the moves, hitting multi-year yield highs.
- The US Dollar extended its rebound from February into March, resuming the 2021 positive US Dollar trend.
- EURUSD has extended lower, then rebounded and stalled.
- The Pound has moved lower as GBPUSD has further corrected the 2021 bull move.
- The “risk currencies” have rebounded but with the Australian and New Zealand Dollars still vulnerable from the sell offs from multi-year highs versus the US Dollar.
- The US Dollar is vulnerable versus the Canadian Dollar, the Canadian Dollar bolstered by the strong oil price.
- Oil continued its push higher to a new multi-month high, in the aftermath of OPEC+ continuing to restrict production.
- Copper rebounded after a correction lower from a multi-year high.
- Gold staged a small rebound but remains vulnerable as the US Dollar strengthens.
Key this week
- The US switches to Daylight Savings Time, which means the time between New York (CET) and the UK (GMT) is only 4 hours.
- Eurogroup and Ecofin Meetings are on Monday and Tuesday respectively.
- Watching COVID-19 cases, hospitalisations and deaths globally (notably in Europe).
- Monitoring for possible new lockdown restrictions, particularly in Europe.
- Central Bank Watch: We get interest rate decisions, statements and press conferences from the US Federal Open Market Committee (FOMC), the Bank of England (BoE) and the Bank of Japan (BoJ) on Wednesday, Thursday and Friday respectively.
- Macroeconomic data: A relatively light week for macroeconomic data with the focus on Chinese and US Retail Sales, the German ZEW Survey, EU and Canadian CPI and the Australian Employment report.
|Date||Key Macroeconomic Events|
|15/03/21||Chinese Retail Sales and Industrial Production; Eurogroup Meetings|
|16/03/21||RBA Meeting Minutes; Ecofin Meetings; German ZEW Survey; US Retail Sales|
|17/03/21||EU CPI; Canadian CPI; FOMC interest rate decision, statement and press conference|
|18/03/21||New Zealand GDP; Australian Employment report; BoE interest rate decision, statement and press conference; US weekly Jobless Claims|
|19/03/21||BoJ interest rate decision, statement and press conference|