It’s been a busy week with releases around GDP growth, retail sales and inflation. In a nutshell, they are all rising. Biden’s $1.9trn stimulus package is having an immediate effect, shown by the retail sales data, which jumped almost 10%. China’s GDP data showed very healthy progress too, despite being cautious with credit growth. Remember China went into lockdown at least 3 months before the rest of the world, so we are seeing this uplift ahead of other nations. There has also been an increase in global inflation, primarily driven by energy costs.
Bond Yields Come Off The Boil
10-year bond yields dropped back this week. It’s suggested this is down to perceptions that inflation remains under control and doesn’t present a problem yet. Yields are still higher than they were a year ago though, so demand for government bonds has been strong. If yields fall further, investors benefit from price gains (given the inverse relationship between bond yields and prices). If yields rise again, investors can buy into more – and there will likely be plenty of it given the sheer size of the deficit. It was $660bn in March alone, and $1.7trn for the last six months.
The Week That Was…
On Monday, England entered phase II of its lockdown easing with shops, hairdressers, gyms and pub gardens all reopening. Footfall across all UK retail destinations jumped 218% w/w.
The EU has adopted a €800BN Covid19 recovery funding plan to be raised from this year-end to end of 2026. The EU will borrow some €150BN pa. Up to €250BN will go towards green bonds to finance environmentally beneficial projects. The raise will be done via Bills, Medium and Long-term bonds through syndications and auctions.
In the US the BEA reported March Retail sales soared to 9.8% as the fiscal payments kick in. Almost every group is above pre-crisis levels – only the restaurant and bar sector remain below pre-pandemic levels.
Skybound Wealth Management Limited FF2, MBP3, Meadowhall Business Park, Carbrook Hall Road, Sheffield, S9 2EQ
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.
The guidance and/or advice contained within this website are subject to the UK regulatory regime, and are therefore targeted at consumers based in the UK. Skybound Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority. Registered Office - MBP3, Meadowhall Business Park, Carbrook Hall Road, Sheffield, S9 2EQ. Registered Number 04479650, England. Financial Conduct Authority Number 217994.
The information contained within this site is subject to the UK regulatory regime and is therefore targeted primarily at consumers based in the UK. The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk. Neither Skybound Wealth Management Ltd nor its representatives can be held responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.