Powell puts recovery trade back on track
February 25, 2021SharePrint
The inflationary wobbles in global stock markets were partially put to rest overnight, as the Federal Reserve Chairman, Jerome Powell, continued soothing frazzled nerves during his second day of testimony on the Hill. Apart from highlighting something already mentioned here previously, that cost/push inflation as the global recovery gathers pace would be transitory (one-off rises in components of the CPI drop out after a year), Mr Powell emphasised that employment targets were far away and that monetary policy would remain lower for longer.
That was enough for the perpetual circling dip-buyers in multiple asset classes to re-emerge from hiding. Equities abruptly reversed their losses and powered higher. The intra-day rise in US yields also changed course, although they finished slightly higher on the day. The US dollar also reversed most of its intra-day gains.
NSE s India VIX, a gauge of the market s expectation of volatility over the near term, fell 5.2 per cent to 22.89. Meanwhile, BSE s market capitalisation stood at Rs 206 lakh crore in today s session
The dollar drifted lower in early European trading Wednesday, with traders betting on riskier currencies after Federal Reserve Chairman Jerome Powell kept a dovish stance in his semi-annual testimony to Congress. At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 90.058. Fed chief Powell reiterated on Tuesday that U.S. interest rates will remain low for some time and the central bank will keep buying bonds to support the U.S. economy, even as Congress prepares to authorize President Joe Biden’s new $1.9 trillion support package.
Yves Bonzon, Group Chief Investment Officer at Julius Baer, looks into the future trends In association with
Highlights
Yves Bonzon, Group Chief Investment Officer at Swiss Wealth Manager Julius Baer, talks to
Gulf News on the secular trends that will define the next decade and how the pandemic continues to impact financial markets
You came out recently with the ‘Secular Outlook’ report defining the key themes for a decade. Did you see a major shift in trends from 2019 to 2020 impacting your outlook due to the pandemic?
The pandemic did not as much shift secular trends as it accelerated them, and substantially at that. Back when we first formulated the key themes for the 2020s in the fall of 2019, we hypothesised the end of the neo-liberal era was close, and envisioned a new unorthodox policy template, which relies less on purely monetary levers and places a greater importance on fiscal stimulus and debt monetisation, as suggested by proponents of Modern