Since April lockdowns, inflation has been more pronounced within a subset of goods such as used cars, sporting goods, and electronics, led by both an unexpected increase in consumer demand and temporary supply chain constraints. If demand-driven inflation proves to be persistently strong, the Fed timing for policy liftoff may potentially be pulled forward. However, this depends on the pace of consumption recovery.
Global equities mostly ended higher last week. In the US, stimulus driven optimism pushed the S&P 500 up 1.58%. Meanwhile, European equities rebounded 0.92% as global growth sentiment outweighed headwinds from delayed vaccine rollouts and mixed messages from governments. In the UK, the commodities-heavy FTSE 100 was up 0.58% last week, notching its strongest daily gain in over two weeks, and retracing earlier losses as energy prices rose sharply. Read More
Oil prices saw some volatility last week after a container ship ran aground in the Suez Canal and blocked a major oil shipping route. Supply-side constraints outweighed demand concerns as a worsening COVID-19 situation in Europe prompted intermittent selloffs in both WTI and Brent crude oil, which ended the week higher at $60.97 and $64.57 per barrel, respectively. Read More
US 10-Year Treasury yields fell amid Chairman Powell’s comments in Congress citing the unemployment rate “underestimates the shortfall” and progress remains weak in sectors most impacted by the pandemic. Treasury rates partially retraced earlier declines as last Friday’s Treasury auction saw increased demand, ending at 1.66%. Concurrently, short rates stayed mostly unchanged as the curve flattened with the 2-10 Year Treasury spread falling by 6 bps. In Europe, 10-year UK Gilt and German Bund yields both declined and ended the week at 0.76% and -0.35%, respectively, with the latter hitting a five-week low reflecting concerns over lockdown extensions. Read More
The US dollar continued to rise against major peers, supported by a stronger US vaccine distribution and economic recovery. The Euro ended 1.0% lower at $1.1790 against the dollar. Read More
US Core PCE, which excludes fresh food and energy, increased by 1.4% Year-over-Year in February, marginally below consensus expectations, reflecting a sharp fall in income as stimulus checks ended. Read More
US jobless claims fell by 12% to 684K, its lowest level since the pandemic began, as business restrictions begin to ease in some states. UK Unemployment unexpectedly decreased to 5.0% in January, from 5.1% the month prior, even as millions remain on the government’s furlough scheme. Read More
March’s Euro area flash composite PMI came in significantly above expectations at 52.5, primarily led by gains in Germany and France. Manufacturing PMI posted at a historical high of 62.4, and Services PMI similarly improved despite tighter lockdown restrictions in the region. Read More
The German Ifo Business Climate index jumped to 96.6 in March, up from 92.7 the month prior. The above-consensus print reflected increases in both current conditions and business expectations for the 6 months ahead. At a sector level, the increase was led by trade, manufacturing, and services. Read More
For style performance, Large, Mid, and Small refer to the Russell 1000, Russell Midcap, and Russell 2000 indices, respectively. Value refers to companies with lower price-to-book ratios and lower expected growth values, and Growth refers to higher price-to-book ratios and higher forecasted growth values. Government, Corporate, and High Yield refer to the US Treasury index, the US Corporate Credit index, and the US High Yield index, respectively. Short, Intermediate, and Long refer to the Short, Intermediate, and Long segments of their respective curves. Quality returns refers to the credit quality of asset classes ranging from Government, highest quality, to High Yield, lowest quality.
China Composite PMI (Cons: -, Prior: 51.6)
Euro area HICP YoY (Cons: -, Prior: 0.9%)
UK GDP YoY (Cons: -7.8%, Prior: -7.8%)
US Jobless Claims (Cons: 680k, Prior: 684k)
US ISM Manuf. (Cons: 61.4, Prior: 60.8)
UK Manuf. PMI (Cons: 57.9, Prior: 57.9)
Nonfarm Payrolls (Cons: 643k, Prior: 379k)
US Unempl. (Cons: 6.0%, Prior: 6.2%)
“Euro PMI” refers to the Markit Eurozone Composite Purchasing Managers’ Index. “Cons. Conf.” refers to US Consumer Confidence. “GE IFO Business” refers to the German Ifo Business Climate Survey. “New Home Sales” refers to US New Home Sales (MoM). “Dur. Gd. Ord.” refers to US Durable Goods Orders. “UK GDP” refers to the QoQ estimate of the United Kingdom’s Gross Domestic Product for Q3. “Euro M3” refers to the YoY change in the Eurozone’s M3 Money Stock. “US GDP” refers to the estimate of US Gross Domestic Product for Q3. “Pers. Cons.” refers to US Personal Consumption. “UMich Cons. Sent.” refers to the University of Michigan Consumer Sentiment Index. “Japan Core-Core CPI” refers to Japan’s Consumer Price Index (ex- Food, Energy YoY).
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