12.03.2021 - As of noon on Friday, global equities rallied sharply on the week, with several major US indices closing in record territory on Thursday. Steadier bond yields and improving coronavirus trends helped support the advance as technology shares regained some of the ground they lost recently. The 10-year US Treasury yield consolidated in a choppy 1.50% -1.60% range this week, ending near the top of the range. The price of a barrel of West Texas Intermediate crude oil was little changed from week-ago levels at $65.35 while the Cboe Volatility Index (VIX) declined to 22.5 from 28.
MACRO NEWS
Biden signs stimulus bill
US President Joe Biden signed a massive $1.9 trillion stimulus bill on Thursday. Checks in the amount of $1,400 will be distributed to Americans below certain income thresholds, and billions in aid will flow to state and local governments. Secretary of the Treasury Janet Yellen said funds will begin to be deposited in individuals' accounts as early as this weekend. According to a recent survey of individual investors by Deutsche Bank, some of the money may make its way into financial markets. . The bank found that they plan to put an average of 37% of any stimulus payments into equities. With regard to the pandemic, Biden, in a televised address Thursday evening, asked state governments to make vaccine doses available to all adults by 1 May with the aim of beginning a return to normal by the 4 July Independence Day holiday.
ECB quickens bond-buying pace
In response to the recent global backup in long-term sovereign bond yields, the European Central Bank announced on Thursday that it expects to significantly increase the pace at which it purchases government bonds as part of its Pandemic Emergency Purchase Program over the next quarter. The move is meant to prevent "a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation," the central bank's governing council said.
CEOs bullish on UK
An annual survey of 5,000 business leaders conducted by PwC showed that Britain is a more attractive proposition for multinational companies today than it was before Brexit. The survey found that the United Kingdom, edging out India, is the fourth-most-promising growth opportunity (after the US, China and Germany).
Fed dials back pandemic programs
Citing low usage, the US Federal Reserve announced on Monday that it will allow three programs put in place at the height of the pandemic-related market crisis to expire as scheduled at the end of the month. As of 3 March, just 3.5% of these facilities' capacity had been utilized. The programs to be phased out are the Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility and the Primary Dealer Credit Facility, while the Paycheck Protection Program Liquidity Facility will be extended by three months until 30 June.
US inflation ticks up but core contained
The US Consumer Price Index rose 0.4% month over month in February, but core inflation, which excludes food and energy prices, rose just 0.1%. Headline inflation rose 1.7% compared with year-ago levels. Producer prices rose 0.5% last month while the core rose a more muted 0.2%. Year-over-year inflation figures are expected to rise sharply in coming months in comparison with the low inflation readings recorded during the early months of the pandemic.
QUICK HITS
US and Chinese officials will meet in Alaska on March 18 in the first bilateral meeting since the Biden administration took office in late January.
Exports from China surged in the first two months of the year, avoiding the usual seasonal slowdown that accompanies lunar new year celebrations. Coronavirus-related travel restrictions kept factories that normally shutter over the holiday period on line this year.
The Organization for Economic Cooperation and Development this week increased its global growth projection to 5.6% from 4.2%.
The US Department of Labor announced Wednesday that it will not enforce a pair of Trump-era rules that restricted the use of ESG investments in retirement plans. The Labor Department said it would likely publish further guidance on the rules or rewrite them completely.
Amid a bumpy European vaccine rollout, the European Union this week approved the Johnson & Johnson COVID-19 vaccine.
Flow data from Bank of America show that investors have been selling bonds and gold and buying equities, particular emerging market and value stocks. Financial conditions in the G7 have passed "peak easy," the bank said.
On Thursday, the UK announced it will delay import checks on goods entering from the EU for about six months due to disruptions associated with the coronavirus.
Eurozone industrial production was stronger than expected in January, up 0.8% month over month, led by an uptick in French output.
China's legislature approved electoral changes that would put pro-Beijing loyalists in charge of Hong Kong and bar opposition groups from holding office. The changes give the Chinese government greater control over local elections in the region.
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