19 Mar 2021
Week Ending March 12, 2021
During the pandemic, the personal savings rate soared as Americans elected to delay spending. Savings have declined recently but at 20.5% still stand at historic highs. With more businesses reopening and new stimulus checks from the Biden administration’s $1.9 Tn stimulus bill potentially hitting before month end, we believe pent-up demand and savings may further fuel the economic recovery.
GLOBAL EQUITIES: While investors watched for another round of bond sell-offs, US fiscal stimulus and tepid inflation data drove the global equity market rally. The S&P 500 was up 2.69% last week, ending at a fresh record closing high, as President Biden signed the $1.9 Tn “America Rescue Plan” stimulus package. Meanwhile, European equities welcomed the ECB’s decision to increase the pace of PEPP purchases in response to the recent bond sell-off. The Euro STOXX 600 ended higher 3.56%.
COMMODITIES: Oil prices continued to rise on the back of an improved demand outlook. Yet oil price gains were offset by higher-than-expected US crude inventory build, an aftermath from Texas winter storm in February. WTI and Brent crude oil ended the week moderately lower at $65.61 and $69.22 per barrel, respectively.
FIXED INCOME: US 10-Year Treasury yield hit its highest level in a year, surpassing 1.64% during last Friday’s trading, amid continued improvement in economic reopening, vaccinations, and labor market recovery. Yields also held up during last week’s Treasury auction where sufficient demand eased concerns that the market would not be able to handle a growing debt burden. The 2-10 Treasury spread was at its highest level at 148 basis points since September 2015. The 10-Year UK Gilt yield followed suit, ending higher at 0.82%.
FX: The US dollar weakened 0.38% against a basket of major peers, as risk-on sentiment led traders to global markets and shrugged off pressure from rising bond yields on Friday. The British sterling and euro strengthened against the US dollar, ending at $1.1949 and $1.3923, respectively.