Fresh optimism

28 June 2021

In this week’s Market Pulse, Chief Investment Officer Bernard Swords discusses the improvement in market sentiment last week including growth data and the implications of the latest potential fiscal stimulus in the US.

  • After a brief panic, equity markets resumed their upward march buoyed by more reassuring comments from FOMC members including Chair Powell reiterating that much of the inflation pressure stills appears transient and that the Fed will be patient.
  • The economic data gave a little bit of relief on inflation. In the US, the PCE (Personal Consumption Expenditures) pricing data, the measure which the Fed watches, came in below expectations, above 3% on a YoY basis but down on a MoM basis, 0.7% to 0.4%.
  • It appears that there have been some very positive developments on the potential for a large sized infrastructure package in the US. It looked like it was going to get bogged down in arguments over social infrastructure and the climate change agenda. This could re-emerge, but it is looking good for continuing fiscal support for the US economy beyond 2022.
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