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Archinomics Weekly - Monday 12th July 2021

3 months ago

the
MARKETS

Equities

US equities once again hit record levels, pulled higher by the interest rate sensitive real estate sector. Eurozone markets ended the week little changed after dipping on growth concerns, as Covid-19 infection rates climbed. Japan saw sharp losses, as Tokyo entered its fourth state of emergency. China’s CSI 300 index was mixed, despite tech sector weakness on heightened regulatory risk.

Bonds

US Treasury (UST) yields dropped sharply, hitting a five month low, as prices rose. Core eurozone bond yields tracked UST yields lower. Credit markets were more subdued and spreads widened, led by the energy sector at the high yield end of the market, as uncertainty mounted over the economic outlook.

Currencies

The US dollar lost ground across the board, as prospects for interest rate rises appeared to weaken, while the yen was generally stronger. The euro slipped back following the latest ECB meeting, while sterling improved against all except the yen.

Commodities

Oil had a volatile week, as the OPEC+ meeting ended with no agreement on restoring production cuts. Gold rose 1.5%, touching the $1,810 level, in response to recent bond market volatility.

Responsible investing

Nearly half of all global assets under management, totalling $43 trillion, are now linked to carbon neutral pledges under the Net Zero Asset Managers initiative.

MACROECONOMIC
UPDATE

Macroeconomic indicators fell short of expectations, and an economic optimism index slipped to its lowest level since February.


The rapid spread of the Delta variant of Covid-19 around the globe caused rising uncertainty as to economic recovery prospects.


The PBoC cut its reserve requirements, signalling slightly looser policy, while the ECB shifted its inflation mandate to allow for overshoots of the 2% target.

on the
RADAR

Macro data from China and the US could confirm expectations that the pace of growth in GDP and inflation has peaked.


The US Q2 reporting season is forecast to bring average eps growth of more than 60%, as recovery earnings peak.

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