Equities rallied as government bond markets were reassured by the US Federal Reserve, with the tech heavy Nasdaq index at the forefront of gains. This week the focus will be on US inflation and retail sales data, as well as the expected rebound in China’s GDP after the pandemic-struck first quarter of 2020.

President Biden’s infrastructure stimulus package, worth $2.25 trillion, stole the headlines and will be much debated in Congress over the coming week. Elsewhere, as strong survey data came through, China’s currency fell to the lowest point since the trade war with the US, on expectations that monetary stimulus measures will soon be withdrawn.

Value sectors continued the outperformance seen year to date, in anticipation of stronger global growth. The grounding of a massive container ship in the Suez Canal sparked volatility in the oil price, as well as significant disruption to global trade in manufactured goods. The focus for this week will be on US employment data, a series key to the US Federal Reserve’s interest rate policy.

The end of February brought a sudden spike in volatility, as longer dated bond prices fell and highly valued equities tumbled. The trigger was a bout of nervousness over rising inflation.

It was a positive week for most stock markets with sentiment improving as a result of wavering bond market volatility. And in the US  the S&P 500 and Dow Jones reach new all-time highs. Looking to the busy week ahead,  the US Federal Reserve meeting looks to be the main event with FOMC officials expected to release updated economic projections and could comment on rising Treasury yields.

It was a positive week for most stock markets with sentiment improving as a result of wavering bond market volatility. And in the US  the S&P 500 and Dow Jones reach new all-time highs. Looking to the busy week ahead,  the US Federal Reserve meeting looks to be the main event with FOMC officials expected to release updated economic projections and could comment on rising Treasury yields.

Nervous trading in the bond markets continued to rattle highly valued equity sectors, while reassurance from the US Federal Reserve missed its mark. The week ahead should see President Biden’s $1.9 trillion American Rescue Plan signed into law, while February inflation data from the US and China might do little to calm the markets’ fears.

Volatility rose across global financial markets, propelled by the US government bond market’s fear of rising inflation. This week will bring further indicators of the recovery in economic activity, with US employment numbers expected the show the strongest pace of hiring since November.

Equity and bond market performance diverged further, given mounting expectations that stimulus-fuelled demand could spill over into higher inflation. The week ahead will bring fresh sentiment surveys, as well as inflation and GDP data from the US and other major economies.

In 2020, the boom in financial markets contrasted with the disastrous economic effects of Covid-19. The market narrative played ‘catch up’ with the market action, attempting to justify soaring valuations.

Equity and commodity markets maintained their rising trend. Japanese indices touched levels not seen for 30 years, although the emerging markets were the clear outperformers. This week Q4 earnings reporting is set to continue, while flash PMI data from across the globe should indicate the strength of improving sentiment.

It’s been called ‘the year to forget’, but there is no denying that 2020 has been a memorable year. Markets hit new peaks in February, before the Covid-19 pandemic struck home and caused a spike in financial market volatility. Since then, with huge rescue packages in place and abundant liquidity, many markets recovered their nerve. Boosted further by the prospect of a reflationary new US president and an effective vaccine against Covid-19, new highs have been reached.