On Thursday, the stock rally stalled as investors assess the weaker-than-expected US inflation data. There was reflation sentiment in the market, when investors were betting on the growth of inflation and, accordingly, the growth of shares. The slowdown in the core CPI eased the bulls’ fervor slightly.
10-year US Treasuries yield fell below 1.15% just after the core CPI index had slowed. While there is currently no effect from the imposed stimulus by the Fed, investors are expecting an acceleration in the indicator due to consumer demand, which should increase as the additional stimulus from the US government is introduced and the economy recovers.
In his Wednesday’s speech, Federal Reserve Chairman Jerome Powell said that the U.S. job market was far from full recovery and appealed to the government and the private sector to support jobs. He also said that achieving and maintaining high employment rate would require more than just supportive monetary policy, hinting at fiscal policy and the acceleration of direct payments to citizens.
2-year US Treasury yields hit an all-time low, highlighting weak expectations for a longer-term interest rate rise.
The positive news came from the World Health Organization, which recommended the AstraZeneca vaccine for all adults over 18, paving the way for accelerating vaccination in developing countries. Meanwhile, the daily number of new coronavirus infections in the United States was below 100,000 for the third day in a row, for the first time since November 2.
Main market quotes:
- S&P 500 (F) 3,909.12 +6.12 (+0.16%)
- Dow Jones 31,437.80 +61.97 (+0.20%)
- DAX 13,933.70 +0.73 (+0.01%)
- FTSE 100 6,535.62 +11.26 (+0.17%)
- USD Index 90.412 +0.049 (+0.05%)
Important events:
- Initial Jobless Claims at 15:30 (GMT+2);
- Fed Monetary Policy Report at 18:00 (GMT+2).
