Market Update Week 12
Yields on the 10-year U.S. Treasury bonds stayed stable throughout the week after last week’s 1.7% high. Volatility, tracked by the Volatility Index (VIX), has been fairly low this past month. The U.S. however faced retracting home sales, personal spending, and manufacturing numbers. Oil also dipped below $60 per barrel again. Fed Chair Jerome Powell and U.S. Treasury Secretary Janet Yellen announced this week that the U.S. economy is recovering at a higher pace than previously expected and believe that the GDP will spike this year. What is left behind so far is the labor market and inflation. Powell and Yellen are both of the opinion that there is a need for more fiscal and monetary stimulus to aid the economy. These stimuli however should take different forms than the prior ones.
As you may know, not all sectors recover(ed) from the pandemic at the same time or at the same speed. The same holds true for geographical areas. Countries such as the U.S. are well ahead and are believed to reach herd immunity by summer while many European countries are facing new coronavirus waves of the British variant and are lagging in vaccination. Lockdowns and other containment measures are being announced once more or prolonged in countries such as Germany, Italy, and Poland. These developments had their effects on European stocks and the EURO. As for the European economy, the Eurozone showed tremendous growth (highest since 1997) in terms of business activities tracked by the Purchasing Manager Index (PMI).