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Weekly commentary 21 April 2021



Equities pushed higher last week, as data and earnings beat expectations, but US bond yields fell

Markets pushed record highs yet again on Friday as the ‘goldilocks’ environment continued for equities with bond yields holding steady. Importantly for risk appetite, the US earnings season has started strongly and, while it’s still early days, over 80% of companies have beaten expectations so far.


Global weekly COVID-19 cases hit a pandemic peak, as European and US regulators decide whether to resume the Johnson and Johnson vaccine rollout

Global COVID-19 cases continued to rise last week with over five million cases reported over the last week, which is the largest number of weekly cases since the pandemic began. India is seeing around 1.4 million of these cases but many parts of the world are seeing a surge in case numbers1. One of the more positive factors driving the recent stronger risk narrative is progress in the rollout of vaccines within EU countries. This week, the European Medicines Agency will issue their recommendation on the Johnson and Johnson (J&J) vaccine, which remains an important vaccine in the EU’s armoury. The US is also expected to release its report this week with Dr Fauci expecting a resumption of J&J vaccinations, saying he doubts the US regulator’s recommendation will be to cancel the rollout.


European Central Bank (ECB) meeting on Thursday 22 April comes amidst signs of an early recovery but we expect no change at this meeting

On Thursday, the ECB will release their latest decision on monetary policy, accompanied by a press conference by President Lagarde. Despite signs of an improving vaccine rollout and early signs of an economic recovery, we do not expect any meaningful change to the central bank’s stance. The pandemic quantitative easing programme continues at a rapid pace and this is the first area we expect to see slowed as the recovery takes hold. This is unlikely to be in scope for April’s meeting however, with much of the eurozone under forms of heavy coronavirus restrictions. As with the Federal Reserve, we expect the ECB to strike a note of caution, focusing on unemployment figures, as well as the uncertainties over new variants, to justify a highly accommodative position for the short term.


Markets are looking through the third wave in COVID-19 cases, focusing on the vaccine rollout and an earnings season which is beating already upgraded projections. Critical to this ‘goldilocks’ environment are bond yields, and over the last few weeks they have fallen, despite better than expected data. Many datasets, including the Purchasing Managers’ Indices releases this week, contain information about purchaser price inflation and this will be closely watched by investors to see if the ‘goldilocks’ regime remains.


1 Bloomberg, 18 April 2021 ( )

SOURCE OF CONTENT:  Brooks MacDonald


The Week In Numbers




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