Even though markets are beginning a new month, a large emphasis will remain on some key themes which emerged in February. Mainly, the relationship between inflation expectations and global bonds and their subsequent impact on other financial assets.
The month of February saw a sharp spike higher in global bond yields as participants began to express concern over the prospect of a surge in inflation. After days of ignoring this move, both FX and equity markets decided to take notice. Markets witnessed an ultra-strong bid for the greenback and a lack of bids for stocks which created a strong move lower. This will be a key theme as March gets underway.
Jobs data will be the most important release from the US this week while inflation, retail sales, and unemployment numbers will all feature from the eurozone. Domestically, Chancellor Sunak will deliver a fresh budget on Wednesday. He’s expected to extend furlough whilst also providing additional support for businesses as the UK begins its stage-by-stage restriction easing process.
8:15am, March 1st 2021
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