Economic and investment highlights
- US President Biden and the ‘blue’ Senate are finalising details for a significant additional fiscal package to be passed in March, providing a large adrenaline boost to the economy
- The successful vaccine rollout out has continued at pace in both the US and UK. Europe has lagged but this is unlikely to continue for long. Draghi became PM in Italy
- Extremely accommodative monetary conditions, fiscal stimulus in both the US and Europe, and an economic reopening following the vaccine rollout points to a significant boost to the economy and…inflation!
- Prospects of a recovering economy and additional stimulus shifted market sentiment to begin to price in more of an economic recovery (both growth and inflation)
- Long bond yields rose and provided a headwind to the fixed income market, especially in areas of negative/low yield or long duration
- Equity markets priced in more economic recovery and some of the lagging sectors, such as banks