Every week The Park Bench will bring you the Financial Market Recap written by MCR member Yanrong Hong.
Major economic data released this week:
- Monday: German Feb Manufacturing PMI (actual 60.7 > forecast 60.6, previous 57.1); UK Feb Manufacturing PMI (actual 55.1 > forecast 54.9, previous 54.1); US Feb ISM Manufacturing PMI (actual 60.8 > forecast 58.8, previous 58.7)
- Tuesday: Europe Feb CPI (+0.9% YoY)
- Wednesday: UK Feb Composite PMI (actual 49.6 < forecast 49.8, previous 41.2); UK Feb Services PMI (actual 49.5 < forecast 49.7, previous 39.5); UK Annual Budge Release; US Feb ADP Nonfarm Employment Change (actual 117K < forecast 177K, previous 195K); US Feb ISM Non-Manufacturing PMI (actual 55.3 < forecast 58.7, previous 58.7); US Crude Oil Inventories (actual 21.563M > forecast -0.928M, previous 1.285M)
- Thursday: UK Feb Construction PMI; US Initial Jobless Claims; US Feb Chair Powell Speaks (pending)
- Friday: US Feb Nonfarm Payrolls; US Feb Unemployment Rate; US Federal Budget (pending)
1/ The renewed bout of Treasury volatility spurred a surge in bond yields on Wednesday, dragging down stocks as investors grappled with concern over stretched valuations. A selloff in high-flying giants such as Apple and Amazon outweighed gains in banks and energy producers. The Nasdaq 100 slumped to a two-month low, bringing its losses from a February peak to about 8%. The S&P 500 extended its slide into a second day, while the Dow Jones Industrial Average outperformed. Benchmark U.S. government yields approached 1.5%, with bonds pricing in the highest five-year inflation expectations since 2008. The rout in Treasuries has rattled nerves across the globe amid warnings of excessive optimism among equity investors after the S&P 500 surged 70% in 11 months, notching the best start for a bull market in nine decades. While there haven’t been any signs of panic, concerns over lofty valuations have emerged (Bloomberg).
2/ President Biden and Democratic leaders have reached a compromise on a deal that would limit who is eligible for $1,400 stimulus cheques, as lawmakers wrangle over the U.S. president’s proposed $1.9tn economic relief package ahead of a vote in the upper chamber. Democrats last week passed the sweeping coronavirus relief bill, which includes $1,400 direct payments, an extension of federal top-ups to unemployment insurance, and $350bn for state and local governments. But the bill — which Biden has made the centrepiece of his legislative agenda — is now being pored over by the Senate, which has a 50-50 balance between Democrats and Republicans. Several moderate Democrats, including Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, have argued that the bill — which would be the second-largest stimulus package in U.S. history — needs to be more “targeted” (FT).
(Source: Bloomberg, Financial Times)
Yanrong (Sunny) Hong is reading for the MSc in Financial Economics.
She hopes that these weekly recaps will lead to meaningful discussions amongst any Regent’s members interested in Businness or Finance. If that’s you, then leave a question or comment in the section below, or send her a message: yanrong.hong@regents.ox.ac.uk
