Week from 15 to 21 March 2021
At the Fed policy meeting, Jerome Powell said that the central bank will keep its key rate near zero until 2024. Yet inflation is likely to reach 2.4% in 2021. He also predicted that the U.S. economy would grow 6.5% this year. His dovish comments pushed the yield on the 10-Year U.S. T-Note above +1.72%, its highest level in 14 months. By contrast, the yield on the 10-Year German Bund remained virtually unchanged at -0.29% (+1bp over the week), widening the gap with U.S. Treasuries.
Stocks Lose Ground after Last Week’s Rally
The Dow Jones slid by 150 points (-0.46% week-over-week) after hitting all-time highs on Wednesday (33,015.37). The S&P 500(https://www.trackinsight.com/en/index/379) slipped -0.77% while the NASDAQ fell -0.79%. For once, small cap stocks lagged far behind their large cap counterparts (Russell 2000 down -2.77%).
Very few S&P sectors – communication services (+0.53%), health care (+0.37%) and consumer staples (+0.23%) – finished the week in positive territory. Energy (https://www.trackinsight.com/en/segment/84)was the worst performer (-7.66%) as oil prices tracked lower (WTI down -6.39%) on concerns of another rise in U.S. crude oil inventories (+2.396 million barrels last week). Financials(https://www.trackinsight.com/fr/segment/97) (-1.68%) and tech(https://www.trackinsight.com/fr/segment/103) (-1.35%) also weighed on the broader market even if Facebook managed to gain 8%.
Europen markets hovered (MSCI EMU flat: +0.04%) near record highs in spite of a third wave of COVID-19 infections and the EU’s vaccine mess. APAC markets closed mixed. The Nikkei 225 was up +0.25% though the Bank of Japan intends to widen its target band for government bond yields. By contrast, the Shanghai Composite fell -1.40%, extending its losing streak to three weeks.
Credit Markets Still Weak
Corporate bonds retreated with the uptick in long-term interest rates. Investment grade bond prices fell -0.07% in Europe and -0.24% across the Atlantic. High-yield bonds lost -0.06% in Europe and -0.46% in the U.S. while emerging debt edged down -0.04% in local currencies.
Elsewhere, Gold(https://www.trackinsight.com/en/segment/719) rose +1.05% to $1,745.23/oz even though the dollar strengthened against the euro (+0.28%), helped by rising Treasury yields. BTC/USD broke the $57,500 level on the weekend.
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2021-03-19/global
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