Markets are off to a good start in 2021. Equities and commodities are surging while treasury yields topped 1% for the first time since March 2020. Oil is trading close to its pre-pandemic level at $53 per barrel with some analysts believing it may reach $70 per barrel this year. Tech stocks have been retracting which is indicative of the ongoing sector rotation.
The Democratic party won the two contested seats in Georgia, USA to control the Senate. This win increases the likelihood of increased fiscal spending in the U.S. which can lead to higher inflation and a sooner than expected hike in interest rates. Financial stocks, real interest rates, and treasury yields have been ticking up since the Senate election. Goldman Sachs increased its GDP growth estimates to 6.4% for 2021 after the Democrats took the Senate.