Investors’ Outlook The global economy heats up and stokes inflation fears

Vontobel
By April 12, 2021 08:16

Investors’ Outlook The global economy heats up and stokes inflation fears

Investors’ Outlook The global economy heats up and stokes inflation fears

Just when we thought we could stop hunkering down in our interconnected yet improvised offices (sometimes carved out from a children’s bedroom), a third pandemic wave has come upon us. Moreover, inflation worries have suddenly emerged.

March has brought another volcanic eruption in Europe (Iceland this time, after Italy in February), wild swings in weather patterns as well as gusts of change for investors. While the third wave of the Covid-19 pandemic now sweeps across the globe, governments’ reactions range from an easing of restrictions amid a successful vaccine roll-out in the US to more lockdowns due to a failed mass vaccination strategy in Europe. Meanwhile, inflation is making a comeback, troubling the sleep of some market participants. Dream or not, this has real-world implication.

Across the Atlantic, consumer sentiment is boosted by the go-ahead for a stimulus package worth 1.9 trillion US dollars, and prospects of an even larger infrastructure package to come. The massive amount of federal and central bank money that’s being pumped into the economy has revived fears of a broad upward trend in prices, pushing US Treasury yields higher. This development has made equity investors uneasy, as higher yields can make stocks look less attractive to hold.

Vontobel
By April 12, 2021 08:16

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