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Monthly Review - May 2021

7 months ago

The Markets


S&P 500




FTSE 100


CAC 40


DAX 30


BEL 20






 Source: Bloomberg 31.05.2021

Fed talks tapering

Or just started to talk about talking about tapering (that is reducing) its massive monthly bond buying programme, in place since the pandemic began. The minutes of the US Federal Reserve’s latest meeting showed some members proposed a plan for broaching the subject with the markets. And that could be as early as the end of this year. After the legendary ‘Taper Tantrum’ of 2013, when the Fed proposed a swift withdrawal of support, and the bond market turbulence in February when a tapering bias was suspected, a cautious approach would seem advisable.

Crypto volte face

Having delighted the so-called ‘crypto bros’ earlier in the year, by suggesting Tesla would accept bitcoin in payment for its cars, Elon Musk abruptly turned his back on the digital currency. The reason given was the environmental impact of bitcoin mining, particularly in countries where coal is still a major source of energy. Recent tweets from Musk seem to favour the lesser known Dogecoin. China then warned of a crackdown on the use of cryptocurrencies as payment. Fears of ‘crypto-contagion’ caused rising volatility in other financial markets.

Carbon copy

As prices touched new highs on the EU Emissions System, Brexit forced the UK to launch its own carbon credit market. Prices opened at a significant premium to those across the Channel, meaning higher costs for the UK’s big polluters. And bigger profits for companies with strong green credentials, who can sell on their carbon credits. Meanwhile Stellantis, the car giant formed by the merger of Chrysler, Fiat and Peugeot, announced it would no longer need to buy carbon credits from Tesla, given the carbon credits earned from their own focus on electric vehicles.

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